Employee engagement: Looking up

The headlines predict months of doom and gloom, but that needn’t have a negative impact on keeping talent engaged. Virginia Matthews reports.

Economists continue to wrangle over whether Britain is ‘officially’ in a recession, but the loss of thousands of City jobs already this year, with doubtless more to come, tells its own story.

Tips for keeping staff engaged during a downturn

The impact on employee engagement and reward has so far not been as bad as anticipated, but a recent survey by pensions and employee benefits consultancy Hymans Robertson suggests that the atmosphere on the ‘shop floor’ is much more negative.

The survey of more than 1,000 employees and 300 HR professionals found that while up to 50% of employees fear they will lose their job in 2008, a similar proportion of HR directors expects an increase in staff. And while one in three employees expects a cut in their benefits package, more than 95% of employers have no plans to do this (see Mismatch in expectations).

But why are employees’ expectations so different from the actual HR agenda? Scott Northcut, executive vice-president, HR, at courier firm DHL Global Express, believes that job security “inevitably becomes a key issue for many employees during times of uncertainty”. He puts transparency, regular feedback and good communications at the top of the agenda.

Good communications

“Staff will respond very positively when they believe their immediate line manager is listening to their concerns and communicating as openly as possible about any prospective changes,” he says.

He argues that in tough economic conditions, all employees should be given recognition for their efforts, and warns that any feedback should aim to be constructive. Job mobility becomes more crucial too.

Career advancement

“Encouraging staff to move between domestic and international divisions of the group, or from one country to another, allows them to gain from new experiences and help develop different parts of the business. It’s a great motivator.”

It’s not all about financial reward either. Northcut believes that an even-handed approach works best.

“Cash is important, but the environment, the level of opportunity and individual attention are equally crucial for all our people, even though our top performers are offered a greater proportion of variable pay,” he says.

Being negative

Creating a negative working climate – whether that’s unwittingly or not – could damage UK productivity. New research from the global management consultancy Hay Group shows that well over half of senior managers are failing to generate ‘high performance’ climates, resulting in some £8.5bn in reduced profits for the UK financial services sector alone.

Its Climate Change? report, based on attitudes among staff in 12 sectors including financial services, manufacturing, pharmaceuticals, technology and telecoms, reveals that as much as one-third of an organisation’s business performance is dependent on a positive working climate.

It claims that less than one-quarter of business leaders create a high-performance climate in the view of their employees, while only 18% manage to generate what is considered an “energising” work atmosphere.

By contrast, some 43% of firms create a positively de-motivating climate, according to the survey.

Slowdown apprehension

While few experts are talking of a full-blown recession, Mike Morgan, managing director of the employee benefits consultancy Peoplevalue, believes that a period of near zero growth is inevitable.

“I think we are some way off from a ‘slump’ or recession, but I do predict a slowdown in growth over the next few years, which will give a whole new meaning to staff motivation and retention.”

“In a period of economic slow down, it is natural for employees to have feelings of uncertainty and apprehension about the future, especially those who harbour dark memories of the last recession.”

While pay increases may not be feasible, Morgan advocates more attention on voluntary benefits, such as staff discount schemes, but stresses they should be offered universally.

“Most staff want to know first and foremost that their jobs are secure and there is no better way to reassure them than by adding or enhancing existing non-cash benefits, as well as recognising and rewarding success,” he says.

“For people who may be feeling the pinch from increases in utilities, fuel costs and mortgage repayments, significant savings on everyday purchases such as groceries and leisure activities can become far more significant when the forecasts are gloomy.”

Non-cash benefits

The return on investment of non-cash benefits might not be immediately visible, but a happy worker is less likely to leave their job than an unhappy one.

Happy workers have a knock-on effect on customer service, which in turn helps an organisation to retain business in a challenging economy.

One way HR can encourage this is through a values-based recognition programme, according to Julian Bazley, incentives specialist at the performance improvement agency Maritz.

He says: “This can help re-focus your employees on your vision and values, and is a great way to encourage them to achieve even greater levels of satisfaction among your clients.”

While Bazley argues that recognition rewards can be based on psychology – thank-you cards signed by senior management, for example – engaging staff still requires some financial commitment.

“A great weekend away at the expense of the company provides a strong memory trace and is likely to have a powerful impact on driving employee engagement,” he says.

So while there might not be much you can do on an individual level about the wider negative economic climate, it is possible to brighten up the outlook within your organisation so that when things look up again, you’ve got your best staff on-side.

Mismatch in expectations


30% of employees don’t expect a pay rise in 2008, but only 12% of employers foresee a pay freeze in their business.

  • One in three employees expects a cut in their benefits package, but 45% of organisations are planning to enhance benefits in 2008.
  • One in 10 employees fears cuts in their pension, yet only 1% of the firms surveyed predicts this outcome.
  • The most common form of pay rise for UK employees in 2008 will be an inflation-only increase (49% of employers).
  • London-based businesses are the most likely to be offering above inflation rises (41%), while those in the North (28%) and Scotland (27%) are the least likely.
  • Employees in small businesses (fewer than 250 staff) are the most pessimistic, with 53% saying they don’t expect a pay rise this year.
  • Source: Hymans Robertson

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