Employee welfare and the economic cycle

Jan 26 2006 by Philip Whiteley Print This Article

The immediate outlook for job-seekers may not be the only casualty following the recent, somewhat surprising nudge upwards in the unemployment figures in the UK. It could also be that the priorities for motivation and the 'employer brand' take a knock.

The promotion of employee welfare and motivation seems to follow the economic cycle. In the full-employment 1960s the most requested Harvard Business Review reprint was the article 'So, once again, how do you motivate staff?' But by the recession of the 1990s and the wave of downsizing, the chilling phrase 'Don't automate, obliterate' captured the essence of the then leadership fad.

Corporate myth-makers seem to generate the idea that treating employees mean is the surest route to profits but that occasionally, when labour is in short supply, you might have to toss them a few extra bones to keep them quiet.

Only when skilled labour is scarce should such 'soft' matters as motivation, prospects and welfare occupy the attention of senior executives, the theory runs.

Not a single research study has supported this view, and hundreds have questioned it, but it continues to shape opinion. Cynicism, no matter how unsubstantiated in reality, always seems to sound more business-like than the concepts of empowerment and motivation.

Short-termist attitudes may resurface if a bout of higher unemployment increases the flow of willing labour
So while corporations have retreated markedly from the absurd excesses of the business process re-engineering craze in the 1990s, the worry is that the conversion is only skin deep. Harsh, short-termist attitudes may resurface if a bout of higher unemployment increases the flow of willing labour.

Are there grounds for optimism that some of the recent lessons learnt on the importance of employee engagement will 'stick' this time around, through all stages of the economic cycle?

There are certainly some grounds for hope. The newer fast-growth companies, notably Google, place a high priority on creating a motivational atmosphere; the increasing popularity of 'Great Places to Work' lists encourage employers to take the matter seriously, and the body of literature around emotional intelligence has helped prompt most organisations to have at least some leadership development initiatives put in place.

Companies with a reputation for efficiency and cost-control, such as the Royal Bank of Scotland and Tesco, actually place at least as much emphasis on employee development. They are members of the Corporate Research Forum, a network of leading employers engaged in exploring the links between people strategies and business success.

Indeed it is interesting that the cult of cynicism makes crude caricatures of organisations, such that attribution of success is always centred on a handful of ruthless actions rather than a more rounded assessment.

The broader lesson is that making people the first priority doesn't mean being nice all the time - although it is extraordinary the extent to which people on both sides of the argument believe this.

The case is not: 'Let's pretend that the interests of shareholders and employees always coincide; let's never make redundancies, and we'll all live happily ever after.' Rather it is: 'Let's stop pretending that the interests always clash; let's recognise that companies consist of people, let's create a motivating atmosphere with prospects, and be honest when we have to make cuts.'

The companies that adopt this approach are consistently more successful than others, but such is the plethora of measures and indicators that it is possible not to see this, and to select one or two indicators in isolation to justify the extremely cynical or extremely idealistic standpoint.

Slowly, the message may be getting through, and it may be that the likes of Tesco and RBS are more telling. After all, it is easy to categorise a company like Google as being for young, funky people and that motivation only matters to them. When mainstream, grown-up organisations take the matter seriously there may be more scope for disseminating the lesson.

Many employees may be more sophisticated in their approaches than is generally credited. A curious finding from a recent survey by Sheppard Moscow was that the UK employees interviewed rated 'having a clear vision of where the organisation is heading' as the most important leadership attribute. The quality 'putting people before profit' was the least well rated.

Employees would appear to understand perfectly well that there is little point in 'putting people first' in such ways that organisational security, and hence job security, are jeopardised. Done in an intelligent way and both people and profits can be jointly prioritised.

According to the Moscow survey, the British working population is savvy enough to maintain commercial good sense through good and bad economic times. The test is whether their managers do, too.

About The Author

Philip Whiteley
Philip Whiteley

Philip Whiteley, co-author of the Radical Shift blog, is a journalist specialising in management, particularly the areas of leadership, motivation and strategic human resources. He is also the Chairman of the Human Capital Forum.