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New era; new relationship between employer and employee 09/03/2011

So great is the problem of employee disengagement in the UK that recent research by the Chartered Institute of Personnel and Development (CIPD) argues that HR should prioritise re-engaging employees.

New era; new relationship between employer and employee

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  1. Employee engagement under threat
  2. Meaningful work and innovation
  3. Courageous leadership
  4. What can HR take from this?
  5. Where can HR go from here?
  6. Walking the talk - building engagement

Employee engagement under threat

Changes announced very recently to the welfare benefits system are designed to make work the best option. How well set up are we to make our workplaces welcoming and places that people would want to be? 

After all, employee morale is reported to be low in organisations in every sector, not only in those which are undergoing downsizings and shedding jobs. Well documented research from the Gallup organisation shows the very strong links between an engaged workforce and high levels of profitability and productivity.

Even in relatively successful organisations with strong employer reputations such as some pharmaceutical or even financial services companies, employee engagement is under threat. Ironically, years of investment in generous employment arrangements as the basis of employee engagement may be backfiring.

Employees have got used to good packages, including handsome bonuses and the lifestyle that goes with them. People develop a strong sense of entitlement so that when benefits such as development are withdrawn, they feel badly let down. Even people whose jobs are not at risk may feel let down.

When jobs are under threat the problem gets worse and trust, the basis of the relationship between employer and employee, evaporates. Just look at recent events. In both pharmaceuticals and financial services industries over the past two years we have seen investment falling, massive 'integration' programmes and restructuring which have resulted in high levels of uncertainty for many employees. Will they therefore retreat back into their shells and focus on their own needs and in so doing hope to secure their jobs and incomes?

Meaningful work and innovation

The challenge for HR in tough times is to re-engage with employees but in a new way. We need to be careful here that the relationship between employer and employee doesn’t become to organisations what the Big Society means to many people; a slogan whose  substance has yet to become clear. We argue that to really re-engage people you have to understand what matters to them.

Research by Roffey Park which began during the economic downturn of 2000 and completed in 2004 pointed out that what people want is meaningful work, a chance to be part of community in which they can achieve something that matters. In particular people said they found work meaningful if they felt they could believe their leaders; that there was genuine mutuality of interest, and that risk and gain were shared.

So is it possible to maintain this degree of mutuality in tough times? Despite the widespread job cuts there are some encouraging signs. Over the past three years we have been seeing some organisations take imaginative and innovative steps to keep people employed, such as a move to part-time working, career breaks, sabbaticals, pay freezes, extra holiday entitlement. Many of these would have been unthinkable a decade ago. But have they simply helped avoid the pain until things picked up again or do they truly signify a shift, a potentially radical change in the employment relationship?

Courageous leadership

The updated research from Roffey in 2009 exhorts HR to keep faith with delivering employee engagement through organisations honouring their commitment to their people and doing the right thing. The John Lewis Partnership (JLP) for example pays all its Partners (employees) a bonus of 10% of salary when the company does well.

This equal sharing in success is a very visible sign of the company’s partnership philosophy and values. JLP kept faith with its employees by honouring the bonus pledge even when profits dropped significantly in 07/08. Perhaps as a consequence JLP rode out the storms that saw other retailers go under (e.g. Woolworths). This demands courageous leadership both from HR and line management.

And even when jobs are being cut, it is still possible to keep faith with employees. A great example of using social media to help build trust and confidence is the work done by Westminster City Council. They invested in their HR teams to handle tough stuff, created a Facebook site and bulletin boards to open up communications channels which allowed for open and honest two-way communications and created a sense of mutual support.

Asda have been extremely innovative. When the recession began, even though employees’ own jobs in Asda were not at risk, many employees were anxious about the employment situation of members of their family, especially parents of young adults struggling to find their first jobs. Responding to the needs of their staff, Asda laid on informal lunchtime sessions where employees could discuss their concerns and get some practical advice.

What can HR take from this?

1. Verbalise the promise and deliver on it

Be clear on what your organisation stands for? Make sure you can communicate in ways which pass the pass the elevator test. Define your core values and communicate relentlessly. Train line managers how to follow through on values at a behavioural level.

2. Share the risk

Too often it has felt like all the risk is with the employee. Transparency in pay and bonuses especially at top levels in the company will help as will closing the pay gap between those at the very top and the rest of the workforce. HR has the data so why not share it?

3. Fix performance problems

Don’t use redundancy, restructuring, integration, transformation programmes simply as a convenient excuse to shift performance problems. HR can lead the effort to sort out performance beforehand. We have the tools at our disposal so use them.

4. Stay visible and don’t retreat into the bunker

Keep the communications going. Even if it is bad news people still want to know so that they can have some control over their lives.

Where can HR go from here?

Many commentators are talking about the 'strange times' and 'unusual markets' that we are currently experiencing. Where there is change there is also opportunity and HR can help rebalance interests as a whole.

For too long and in too many cases HR has only been the instrument of business without thinking through and acting to prevent the real damages this can cause. After all, we are all more alert and impressionable in times of uncertainty and people will remember the way they and their colleagues are treated, the messages they receive and the behaviour they observe during tough times when tough things happen.

The way people are treated will affect whether or not they choose to stay with their organisation, and whether those people whose jobs disappear remain great advocates of their former employer. As all good marketing professionals will tell you, personal advocacy is the most powerful influence on consumer behaviour.

Walking the talk - building engagement

Some of the best practices that we have seen from our consulting work with clients include active ‘walking the talk’ from HR professionals getting out onto the floor and also championing the cause of employees in the boardroom. It is key for HR professionals to be proactive and not to wait. This is the HR stuff we don’t hear enough about. It’s easy to be macho and cut costs; building engagement, gaining trust and thus being in a position to grow your organisation takes a lot more effort and guts.

So HR, now is the time to step up, build organisations which are open, seek to build a continuous relationship with employees, and deal with the tough stuff in ways which are honest, authentic and human. Re-shifting the balance takes real skill but the outcome in terms of raised employee engagement levels and the positive impact on results will make the effort worthwhile.

Stephen McCafferty, Linda Holbeche

Stephen McCafferty, Linda Holbeche

Stephen McCafferty: HR leader and business psychologist, Linda Holbeche, visiting professor HR and OD, Cass Business School