Workforce Dynamics: The Greater Fallout from the Global Financial Crisis
Prior to the Global Financial Crisis we saw a shift in workforce dynamics. Historically the power was always with the employer. You were considered lucky to have a job and you did everything you could to keep it. Then we moved into a new millennium where demand was greater than supply. Power shifted to the employee and good candidates (even bad ones) could pick and choose from a selection of jobs.
As crazy as it sounds, when the "Global Financial Crisis" hit, employers breathed a collective sigh of relief, surely now the power would shift back to them?
So, has that really happened?
Recruitment firm Hudson have just published a report that indicates leaders are approaching this economic shift all wrong. Here are some highlighted challenges we are now facing.
Problem 1: A drop in engagement.
Half of all employees surveyed said that morale in their teams had plummeted since the financial crisis. In contrast only 26% of employers thought there was a reduction in employee engagement.
Clearly this shows that employers are out of touch with their staff and their attitudes. This is devastating for the company as organisations live and die by the engagement of their workforce.
Companies with a high level of engaged staff report 2.6 times more growth in earnings per share, have 12% higher customer advocacy, 18% higher productivity, 51% less inventory shrinkage, 51% less employee turn over and 65% less accidents in the work place as compared to companies with a low level of engagement.
Problem 2: The relationship has become complacent.
32% of employees thought that management no longer saw a need to reward or recognise them, because they were lucky to have a job!
It screams of a lack of empathy and understanding of their workforce. Also indicates that many managers are reverting to a 1950's attitude of leadership where leadership is "put your head down, shut your mouth and don't rock the boat or I will get someone else to do your job".
Problem 3: Fear is keeping them from leaving.
Those who said they were working harder and were more motivated to get their work done since the GFC cited the driving reason as fear of job security. One thing we know about people is that fear is only a short-term driver and eventually leads to disengagement and contempt.
Problem 4: They wont stick around when the good times return!
In the past the average annual employee turnover within companies was around 25%, this year that has dropped to 15%. So how long will this last? Not long, because 47% of employees indicated that they were actively seeking a new role.
Many experts are saying that when the job market does turn around (and it will) there will be a flood of people leaving companies they felt gave them a hard time during the downturn.
Companies that got it wrong in the GFC will spend the next couple of years lining the coffers of recruitment companies rather than enjoying the opportunities that come with an upswing in the economy.
I am already hearing stories of companies who have been asked to reinstate the people they had sacked – because the overseas branch (out of touch with the local economy) reacted too zealously to the bad news and cut too many jobs.
How do we fix it? Research by The Gallup Management Journal indicates that there are four main areas to address to improve engagement in a difficult economy.
Leadership and Direction
Communicate, communicate, communicate! Keep your work force informed of the company's situation and market movements.
Be Transparent – Be open about the decisions made and the reasons why.
Get middle managers on board – if middle managers are supportive of the executive it goes a long way to improving engagement.
Ask your work force for innovation. I was recently working for a company who needed to save 6 million from a department so the overseas head of the company wanted to slash jobs. Luckily, an innovative mind in Australia put it to the department and within a week they came up with a plan to save in excess of this without one job lost.
Outline must win battles – in difficult times leaders must outline which priorities are critical.
Keep your head up as well as down – show your team how their efforts fit into an overall strategy for the company.
Keep training them – When people are under pressure and are fearful it is key to keep sharpening their skills to cope with this pressure
Give them feedback – outline what they are doing well and what they need to improve.
Talk to them about their career progression and identify opportunities for them.
In a flat economy it can be hard to reward your staff with money- start to think more broadly about how else can you reward them.
Thank them. It sounds so simple its offensive but very few companies and managers simply thank their staff for a job well done.