Economic downturn.

Those two words can send a shiver down the spine of any company executive. Like it or not, though, all companies must deal the fallout from such a situation at some point in time. Problems like layoffs and hiring freezes are a part of reality in many industries.

How a company navigates tough times can directly impact its ability to generate success at some point again down the road. Smart businesses find a way to take a negative situation and strengthen both employee morale and the company’s culture.

“It’s not just about managing the chaos during the tough times,” says Aaron Call, vice president of sales and operations for G&A Partners. “What they’re really doing is laying a foundation for what their company is going to look like going forward.”

For more than two decades, professional employer organization G&A Partners has worked to help businesses navigate economic downturns and come out better on the other side. Here, the firm shares some of its lessons learned from the trenches.

Invite collaboration

One thing G&A Partners has learned along the way is that communication plays a valuable role in keeping morale strong in tough times. Business owners who are transparent about what is going on can make employees feel less anxiety about their own future.

But the communication should go beyond transparency to actively involving employees in decision making. When employees can take an active role in improving things, it will create a dynamic culture in a company that will leave it stronger after an economic downturn has passed.

“Communication isn’t always just about the senior executive team being open and honest about what’s going on,” Call says. “That’s very important. But it’s also soliciting feedback from those who are left to do the work and to interact with clients and customers and make sure they feel like their voice is heard. They often have very good ideas and if you don’t ask for them—if you don’t solicit those ideas—often times, those opportunities are missed.”

One G&A client in the energy industry was forced to downsize significantly over the past year because of a drop in the price of oil and other related issues. This meant cutting two-thirds of the company’s existing workforce. To boost morale for employees that remained, the company facilitated internal discussion on how to solve issues behind the layoffs.

It helped the client weather the storm with negligible voluntary turnover from the remaining staff. By involving employees in decision making, they gave them a reason to feel hopeful for the future.

“They’ve solicited more feedback from the staff that remained and they feel like they’re part of the solution,” Call says. “It’s not just the executive team sitting in their ivory tower trying to make decisions. They’ve been very deliberate in soliciting feedback from their staff and making sure they feel like they’re a part of a solution.”

Share the pain

Employees should feel like the company is still interested in their wellbeing. Too often, Call says, executives will try to maintain their lifestyle during a downturn and cut everything at the employee level. This approach can create long-term damage to the company culture.

“You have to be very balanced in your approach,” Call says. “If you’re going to pull something back from employees, make sure you do it in a deliberate way and they can see you’re not just pulling from them but you’re also pulling from across the organization. Employees will respect an employer who is honest and open and sincere about those decisions they are making.”

Invest in your infrastructure

Another G&A client, a construction firm, faced similar problems after the housing market collapsed in 2008. The firm was hit with supply issues and other problems that led to a downturn for the company. It was forced to lay off about 40 percent of its workforce.

The construction firm grew concerned with its reputation and worried about being able to recruit, hire and retain top talent once it regained solid footing. G&A worked with the firm to put the right infrastructure in place so it looked stronger once out of the downturn. This involved solutions like implementing and building up the leadership skills of the middle level management team.

In the end, the construction firm has been able to restore about 75 percent of the staff positions initially cut during the downturn.

“They actually became a stronger employer on the back end because of the infrastructure they had built when things were a little slower,” Call says. “They had a little time to dedicate to looking inwardly versus just going out and finding new jobs and executing on that work.”

Strengthen management

Building a strong middle management, Call says, can help a company keep communication channels open and strengthen employee morale in tough times. They are the ones who field concerns from worried employees and are in the best position to facilitate internal dialogue.

Middle management can help executives show transparency in decision making. Tossing them aside in turbulent times can lead to a greater crisis for a company.

“The worst thing an executive team can do is cut out the middle management during an economic downturn,” Call says. “That’s a terrible idea. You take out the middle management layer and now the employees don’t feel like they have a conduit to the main decision makers. That’s where the leadership really needs to take place.”