turnover and morale during a recession

A reader writes:

Like most companies today, we have recently gone through a series of layoffs, budget freezes, cost-containment measures, low morale, and just plain difficult times. We have traditionally been a company that has overflowed with abundance, and our employees are finding it extremely difficult to cope with the complete turnaround to a company that is now struggling. We are seeing some turnover from those employees who "survived" the layoffs, while other employees who have remained with us are simply "putting in their time" with no passion or enjoyment of their job. This is not a fault in the employees, but rather a result of the economic times.

What measures are your company, and other companies taking to try and stem turnover and improve morale during a time when most budgets are "frozen"? That is, how can we work on improving our morale and reducing our turnover without spending money? Communication obviously is key, but I would be interested in what other companies are doing.

I'm interested in hearing others' opinions on this too, including what has and hasn't worked at their own companies.

I tend to believe that the most important thing in a situation like this is to be open and candid. Too often, companies try to hold information close and not let it get out -- but then either (a) employees can tell that they're in the dark and that alarms them, or (b) information gets out anyway, through unofficial channels, and it gets mangled in the telling and/or it comes without the sense of perspective that could have been attached had it come out more openly.

If you're open and candid with employees about the company's situation, worries, and future plans, most people feel more a part of the company, that you're all in it together. You get people offering suggestions and feeling and acting personally invested. Not everyone, of course. But many.

Similarly, I think people get it when you say, "We're not doing salary increases this year because we're focused on protecting everyone's job stability right now. We're going to take care of you with raises once we can do it safely."

Yes, some people may jump ship if they hear bad news -- but I'd rather be honest with someone and let them make the decision they feel is right for them based on accurate information than not. And really, in this economy, most people are worried there's bad news whether they're hearing it from you or not.

Aside from that, I think the most important things at a time like this are the things that are important all along but which plenty of us don't get right -- making sure people feel valued, get recognized for good work, are getting useful feedback, have clear goals, have the resources they need to do their jobs, and so forth.

That's a boring answer though. I know the alternatives might be things like creative recognition programs or new free benefits, but I really think the above is what ultimately makes people feel as secure as anyone can right now and makes them want to stay.

What do others think?