Faced with the inexorable pressure of a prolonged recession, many organisations feel they have no choice but to resort to cost-cutting, restructuring and lay-offs. But these survival strategies could be doing more harm than good, with new research highlighting a sharp decline in employee morale and commitment - particularly among top performers.
The annual U.S. Strategic Rewards Survey by consultants Watson Wyatt and WorldatWork, an international association of human resource professionals, has revealed that employee engagement levels for all workers at the companies surveyed have dropped nine per cent since last year.
That in itself might not seem particularly startling. But the fact that this figure rises to almost 25 per cent among top performers – and that the proportion of these who would recommend others take jobs at their company has also declined by nearly 20 per cent - ought to sound alarm bells in any organisation that is concerned about how it will be placed to respond when the recession finally comes to an end.
Compared with last year, top-performing employees are 26 per cent less likely to be satisfied with advancement opportunities at their company, the survey found. They are also 14 percent less likely to want to remain with their company versus take a job elsewhere.
"The fallout from the actions employers have taken in response to the recession is now coming to light, and it is significant," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt.
"Having less engaged and committed workers is a major concern for employers. This could have a long-lasting and detrimental impact on productivity, quality and customer service, as well as an increase in the risk of companies losing their best employees."
But it isn't simply employee engagement that has suffered as a result of the recession. Top-performing employees are now far less confident (a fall of 29 per cent) in senior management's ability to grow the business, while four out of 10 believe that the pay and benefit changes made by their employer in the past year have had a negative effect on work quality and customer service.
"One of the many challenges employers will face as the economy recovers is how to re-engage employees, and especially top performers," said Ryan Johnson, CCP, vice president of research at WorldatWork.
"Taking a total rewards approach and looking at all of the ways companies can motivate and retain - including compensation, benefits, work-life initiatives and career development - is going to be essential."
But as Bob Nelson, author of "Keeping Up in a Down Economy" and a recent guest on the Working Week podcast told us, it's not just about rewards. Often, simple, creative, no-cost ways to show your appreciation in a timely way can have a larger impact on your employees in making them feel special and motivating them to rise to the occasion in difficult times.
He identifies six areas that any manager or organisation can focus on to create a more motivating work environment. Creating a clear and compelling direction; ensuring direct, open and honest communication; involving employees and encouraging initiative; increasing employee autonomy; focusing on career growth and development; and recognising and rewarding high performance.
"There are many circumstances managers cannot control, but there are many more they can directly impact in positive ways," Nelson said.
"By focusing on those things that can be controlled, managers can help buffer employees from the negative impact of the economy and help them focus their energies to achieve better results."
During financial crisis, we all expected the help from our government and they did. They have stimulus package that will boost the economy and crisis won't get worse. However, the debate on whether the government should intervene or not during recession is raging. Many believe that the market can heal itself and government intervention is not needed. We can't really tell what is the truth behind this issue and hopefully, this will end for the betterment of the people.
I'm not surpised to hear that a significant proportion of top performers are less engaged now. Top performers are as sensitive if not more so to the climate of the business and when the x bottom per cent of lower achievers get chopped why should top performers they feel the same way they used to about the company just because the ax did not fall on them? Often, it is the people that don't fit into the top performer or essential worker category who contribute significantly to the feelgood factor and general vibe in the office. Like the receptionist who always had a big smile and asked what you did at the weekend. These small human factors matter alot to people and in a time of prolonged recession, it is easy for a company to carve out it's own heart without realising what it has done. The smart top performers pick up on this and also feel it instinctively. When the job market improves they will move on and so they should.
What lies dimly at a distance is not much of a business, as said Thomas Carlyle. In times of big anxieties, I think it's more important than before for managers to acknowledge and promptly appreciate the time n efforts of their teams.