How do I... ensure my staff stay motivated during this tough economic environment?

When Trish Traynor-Watson and her business partner, Mark Costanzo, set up boutique design and build firm Liquid Space in 2003, the trading environment was buoyant. They built a dynamic business that had a family feel. And within four years, they were running a £15m-turnover company.

Since then the recession has taken hold. While Liquid Space is still winning lucrative business—it moved a firm of accountants into an 8,000 sq ft space in the City this year-it has had to change its strategy. "Clients haven't had the budgets so we've had to work smarter and buy better," says Traynor-Watson. The business was also forced to lose 10 employees at the end of 2008.

"We had 10 project managers that we were worried about keeping busy," she explains, "so we restructured the business. We now outsource pretty much all of our project management. It was the right thing to do."

Traynor-Watson says keeping spirits up in this climate has been challenging. "We've had to focus on what we call our anti-credit-crunch staff motivation," she says. This includes honest communication—"we share financial information, whether it's good or bad"—soliciting ideas, wind-down Fridays, duvet days, generous leave, community projects and regular one-to-one coffee meetings.

But employees are still "up and down", she admits. "We've done a fair amount of downsizing for clients this year. When you go into these companies and it's a cost-saving exercise not expansion, you see the concern on [our] people's faces." What else could Liquid Space do to boost morale? We ask three experts...

What the experts say

Roger Mays, HR manager, UPS UK and Ireland
When times are tough, retaining a focus on staff development can easily drop down the priority list. Yet, it is at times like this that morale is at its most volatile.

It is vital to find ways to show you are still committed to investing in the workforce. Cost-effective training can help. By introducing formal NVQ qualifications into its training programmes, UPS has been able to upskill its employees as they work. This helps to keep teams enthused and motivated in their day-to-day roles, while ensuring the business doesn't lose out on vital staff hours.

Motivation also comes from working for a company that acts responsibly and cares about its local community, so promoting volunteer activities and supporting projects that are close to employees' hearts, such as the Global Volunteer Month we have at UPS, is a great way to instill pride and loyalty in your workforce.

Richard Reid, founder, HR consultancy Pinnacle Proactive
Helping your workforce to  understand how their efforts contribute to the bigger picture can  galvanise levels of morale and engagement within a company. Encouraging employees to undertake brief presentations to other departments about their roles,  responsibilities and challenges can promote greater empathy and cohesion within the workplace.

It is also beneficial to share success stories as a way of enhancing positivity. Newsletters, emails or intranet postings represent cheap ways to recognise achievements and to create a family feel at work. Employees work most effectively when they feel part of a community.

It is also important to appreciate how you are doing in your employees' eyes. Feedback about management performance can help you to recognise areas of concern and to fix them before they become bigger issues. It acts as a clear signal to your workforce of your positive intentions towards them.

Professor Cary Cooper, Lancaster University
When people are feeling insecure about jobs, they engage in self-protective behaviour such as attending unnecessary meetings where the boss is present, not communicating as much with colleagues to protect information that may boost their position and staying late to show commitment when redundancies loom.

Prevent this type of behaviour by providing team-based incentives on performance and ensure that people don't work consistently long hours that may damage their health and relationships outside. You should trust them by supplying as much information as possible, even if it's not good news. This stops rumours spreading and could engender a much-needed Dunkirk spirit.

Business Clinic is published in association with UPS