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November 23, 2010

Irish bail out raises tough questions about how to manage your finances (and people) during a time of austerity

Barely has a day gone by since mid-October without some news of the dire situation of our country’s finances. Everywhere we are reminded about saving money, tightening our belts, and making tough choices. So it comes as some suprise that despite these tough choices we can cough up a hefty part of the £71billion bail out fund to be lent to the Irish.

Whether this comes from European Union funds, or that of our very own coffers, will make little difference to those people most worried about their jobs and their families as budget cuts come into play; especially with the news that these loans have led to considerable drops in shares in British banks.

This is a classic example of saying one thing, and then doing something which entirely contradicts it. Despite the fact that there may be a lot of logic in the decision, and that the two financial sitations are entirely seperate, I am sure that millions of people in the UK simply won’t see it like that. This is the time to communicate properly, to reassure people of what you are doing, and to explain how you plan to protect them.

All too often bosses make decisions in their ivory towers that they may feel confident in, but which they forget might concern or alarm their people who are not blessed with all the information you might be. As managers we do not make decisions in a vacum, and everything we do has repurcussion throughout our business, even if it doesn’t seem immediately obvious. Always take the time to see how what you’re doing will affect those who work for you, and make sure you have answers or solutions to their questions. It will pay dividends in the long run.

And perhaps one way NOT to go, is the way of multi-millionaire pop band, Westlife, who took to the pages of The Sun recently to encourage the Irish people to’ pull together and dig deeper’ in these trying times – sentiments which must have left a bad taste in the mouths of those less fortunate people who simply have nowhere deeper to dig (and certainly not multi-millionaire deep wallets to fall back on).

A positive spin is always crucial in challenging times, but you must tread the line between encouraging words and patronising platitudes.

As a report announces that living costs in the country are higher than in more urban areas, how can you support your people?

It is never easy when you come to the end of the year and are having to discuss pay increases, or lack there of, coupled with ever more depressing news about the state of the country’s finances. Added to this statistics from a new report that people living in more rural areas are struggling to get by puts extra pressure on you as an employer.

According to the report, people in rural areas need to earn up to 20% more than those in urban areas in order to reach an acceptable living standard, according to figures released by The Commission for Rural Community. The average wage needed for someone in a remote village is £4,200 more than someone in a town, (£18,600 a year in rural areas, compared with £14,400 in urban areas). This means rural dweller must earn nesarly 50% above the minimum wage. It is thought that tranport and fuel are teh main contributors to the varience.

It’s incredibly challenging if your people have to ask for more money because they are struggling to make ends meet. This isn’t exactly why you pay them, it’s in return for the role they perform, with increases and bonuses added according to length of service, quality of work and more responsibility. How do you tread the line of being both sympathetic and business-minded?

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