Up or Down, Focus on the Economic Reality Your Employees Perceive

Have you felt like the talent management-related news of the last month or so has been decidedly  bi-polar in nature?

In May, the focus seemed to be on the return of the "war for talent" with more employers planning to add staff (SHRM saying 35% to add full-time workers in 2010) and more workers starting to quit. A 25 May Wall Street Journal article cited:

• Right Management: 60% of workers intend to leave jobs when the market improves
• Adecco Group: "preparing for massive reshuffling of talent at all job levels in all industries"
• Dice.com: 57% said nothing could persuade them to stay in current job

The Corporate Executive Board (CEB) agreed, reporting rising stars are increasingly disengaged and actively seeking new employment opportunities:

• 25% of high-potentials plan to leave within the year (compared to 10% in 2006)
• 21% self-identify as highly disengaged (increase of three-fold since 2007)

Yet, the release of job creation numbers threw cold water on these hopes of job growth and potential employee turnover. On 4 June, all 30 of the Dow Jones industrials fell and both DJIA and S&P ended the week at the same place they were in February. Why? Job creation in the private sector in May was nearly flat at just 41,000 (expectations were 180,000) and down significantly from April (218,000). Virtually all job creation in May came from hiring of census workers.

And then, just last week news focused again on quitters outnumbering layoffs. From March through May, more people quit their jobs than were laid off, leading to the conclusion that "the long-term trend points to an improving job market."

To me, all of this confirms the simple fact that company leaders cannot predict when we will pull out of the recession sufficiently for employees to decide to jump ship. We do know, however, that half of employees are disaffected in the workplace and even those who are engaged (high-potentials) will leave for a more fulfilling or appreciative work environment as soon as they are able.

These facts are supported by recent industry research from WorldatWork (The Relative Influence of Total Rewards Elements on Attraction, Motivation & Retention). The study empirically shows that yes, indeed, a culture of appreciation that recognizes and rewards performance is critical to not just employee motivation, but also retention. To motivate and retain employees, companies should focus far more on recognizing performance (and fostering a culture that encourages the same).

This is further supported by research conducted by the McGill Institute for Health & Social Policy (Profit at the Bottom of the Ladder: A Summary Report on the Experiences of Companies that Improve Conditions at the Base). The research found:

"Remarkably few firms currently structure their work environments to optimize the efforts of employees at the bottom of the corporate ladder -- even when those employees are central to creating the firms' added value."

The research also notes that Wall Street practices of rewarding companies that cut wages, jobs and benefits is counterproductive to goals of increased profitability and returns. The findings of this report - treat the people at the bottom right and you'll dramatically improve productivity, increase returns and reduce financial costs - is strong validation of the need to eliminate elitist recognition programs that target the top 10% only and expand the opportunity to recognize and be recognized to all employees at all levels.

What is your employees' economic reality? What steps are you taking now to earn loyalty and encourage commitment to your organization?

As Globoforce's CMO & Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin, Montreal, and Boston. Follow Derek on Twitter at @globoforce.

Comments

[Laura Schroeder]

Derek - in addition to your valid points about recognition, this is a great reminder that productivity and profitability run all the way down the management chain. Many companies could benefit from investigating productivity at lower levels of the organization, calculating the opportunity costs of inefficient processes and talking to employees about how they could work more efficiently.

[Derek Irvine, Globoforce]

That's an important point, Laura. Especially "talking to employees about how they could work more efficiently." Too often, such efforts are imposed from above with no true insight into how the team/function really works. Seeking insight and suggestions for improvement from those who do the work day in/day out is much more likely to yield the results you need.

[jamie Davis]

Derek, nice work pulling together well documented yet opposing viewpoints. One more factor to consider that also plays into this discussion is the disconnect between reported CPI and stealth inflation.

Employees perceive that their real purchasing power is being diminished which causes many otherwise content employees to be on the look-out for opportunities that would enable them to restore their lost purchasing power. For an interesting tool comparing purchasing power from yester-year to today check out http://www.shadowstats.com/inflation_calculator

[Derek Irvine, Globoforce]

Interesting, Jamie. And really, regardless of the point under discussion, doesn't it always come down to perception?