Disgruntled Employees A Ticking Timebomb

Disgruntled Employees A Ticking Timebomb As Companies Remain Blind To Their Workforces' Woes

Auckland, New Zealand – Wednesday 26 August 2009 – The global financial crisis has had a severe and divisive impact on the sentiment of the workforce in New Zealand and Australia according to extensive research released today by Hudson, a leading provider of specialist recruitment, talent management and managed services.

The research findings, part of the Hudson 20:20 Series report Talent Tightrope: Managing the Workplace through the Downturn, reveal that employers consistently think their employees’ sentiment is twice as good as it is in reality.

"In every aspect of current workplace sentiment, whether job satisfaction, motivation, morale, perceived stress levels or job security employers are clearly unaware of their employees' frame of mind," said Marc Burrage, Executive General Manager, Hudson NZ. "For example, nearly half (44%) of the 2,394 employees surveyed indicated that worker morale has plummeted. In contrast, only 26% of the 247 employers interviewed acknowledge that workplace morale has dropped.

"New Zealand companies have been faced with the double-whammy of a prolonged local recession and the impacts of the global crisis, so the initial response to this has understandably focused on rapid crisis management, including slashing workforce-related costs through restructures and redundancies," he said. The results show that over half of the companies surveyed (51%) say revenue has declined, 41% have downgraded their profits outlooks, 37% have undergone or faced a restructure and over a third (35%) have made roles redundant.

"While most employees are not blind to commercial realities and the need of their employers to cut costs and implement rapid change, discontent is brewing," said Burrage. In fact, over a third of all employees (35%) report increasing concern about the impact of the downturn on their personal circumstances. The report looks in detail at the three generations in the workforce (X, Y and Baby Boomers) and found that Baby Boomers have been the most severely distressed with almost half (42%) registering heightened concern about their future.

Productivity is now firmly on the government’s agenda, and improving productivity for the long term is seen as critical to New Zealand’s future success. “While employers are reporting increased productivity now, employees are in fact responding that they are definitely working harder and longer hours, but motivated by fear for their jobs and this is only driving morale down further. It’s vital that employers recognise that the long term effects of this will be a decline in real productivity.”

Insecurity abounds, with almost a third (32%) of employees genuinely concerned about losing their jobs. "This is very different scenario to only a year ago," said Burrage. "Nearly half (42%) said that they feel their job is less secure than the same time last year, but even though they now fear more for their jobs, it doesn't necessarily mean they want to stay with their current employer."

While workplace stress levels have soared due to increased job insecurity, this is compounded by additional pressure to perform and increasing work loads. 54% of employees say that the workplace has become far more stressful since the downturn. Auckland employees acknowledged the highest stress levels at 64%, with Wellington lower at 50%. A third of employees say their workload has increased, while one in four are working longer hours.

This simmering resentment is highlighted by a third of employees (32%) who agreed with the statement ‘management thinks it doesn’t have to reward and recognise our work anymore because we should feel lucky to have a job right now’.

“Communication is breaking down within businesses and managers are finding themselves under huge pressure. Now is the time to upskill frontline managers and provide leadership coaching so they are better able to lead the company through the downturn. Where cost restrictions make it harder to reward staff, ensuring that the best performers are recognised will help retain top talent,” continued Burrage.

Employees' feelings of disaffection are already playing out in the market more employees are now seeking new roles compared to before the downturn. Almost half of the workforce is seeking a new role (47%) and 56% say they would consider roles they previously would not have looked at. "If employees are disgruntled or unhappy with their current roles, the moment a better opportunity presents itself they will leave. It is this danger, of a mass exodus, that employers must be aware of and take urgent steps to avoid."

Interestingly, and contrary to popular conjecture, it is the youngest generation that is displaying the greatest loyalty to employers. One in four Generation Ys, often cited as chronic job hoppers, say they are now more loyal to their company.

Another crucial finding of the report is that employees, in particular Generation Y, are now focused on long-term security and career development over instant, salary-related reward. In the 2008 Hudson 20:20 Series report Candidate Buying Behaviour the main triggers for leaving one’s job were salary related, with 63% giving this as their top reason. In 2009, this percentage has dropped to 45% and career development considerations have moved to the top slot at 58%.

"Employees' priorities and expectations have changed," said Burrage. "It is crucial that organisations understand the impact that this has on recruitment practices. Recruitment is ever more a consultative province and the quality of an organisation's employee value proposition is crucial to attract and retain the best people."

"People are the heart of a business," he said. "A motivated and engaged workforce is key and it is vital that a talent management strategy focuses on the specific drivers needed to create and maintain this motivation and engagement in each and every individual employee."

Editor Note

A summary of the key findings of the report is attached with this release.

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The Hudson 20:20 Series
The Hudson 20:20 Series addresses timely, relevant topics and issues surrounding talent management and workplace performance. Published periodically, these papers are intended to help organisations evaluate and address these issues and their potential consequences.

Hudson commissioned Sweeney Research, one of Australasia’s largest market research consultancies, to conduct comprehensive and independent research into the affects of the downturn on different generations in the workforce.

About Hudson
Hudson is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organisational performance by assessing, recruiting, developing, engaging and retaining the best and brightest people for their businesses. The company employs nearly 3,000 professionals serving clients and candidates in more than 20 countries. More information is available at www.hudson.com

HUDSON 20:20 White Paper 2009
Talent Tightrope, Managing the Workplace through the Downturn

A summary of the key findings is below:

1. Employer/employee disconnect
Many employers (43%) perceive that employers have become more loyal as a result of the recession, but in reality only one in five employees report greater loyalty. The majority of employees are unchanged in their commitment, but one in six employees have become more disillusioned and less loyal (17%).

2. Employees have a wandering eye for job opportunities
Almost half of all employees (47%) are seeking a new role and more than half (56%) say they would consider roles they would previously have not considered. Baby Boomers, previously known for their loyalty, are the most active job-seekers with almost a quarter (24%) on the look out for a new role. A key consideration to accepting a new role is the level of job security.

3. Shift in what’s important in accepting a new job
Employees are now much more focused on long-term job security than instant salary-related reward. In 2008, the main triggers for leaving one’s job were salary-related with 63% giving this as their top reason. In 2009, this has dropped to 45% and career development considerations have moved to the top slot at 58%.

4. What employees want
Of the 36% employees who say company management is not doing enough to address their concerns, a third say better communication with staff is required, 22% are looking for updates on the current economic environment, 12% want management to be more open and honest about the situation of their organisations and 7% would like information on the company’s financial performance.

5. Employees are anxious and scared of losing their jobs
Respondents regard themselves as extremely or quite anxious about the downturn (35-42% depending on generation). Almost a third (32% of employees) are afraid of losing their jobs and feel less secure than the same time last year. Over half (58%) of workers say they value their jobs more than before the downturn. These feelings are heightened that nearly half (46%) have seen friends and relatives lose their jobs and one in three employers have made roles redundant. A further 25% are considering redundancies.

6. Impact on morale
The impact on morale has been significant – almost half (44%) of all employees believe morale has declined. Surprisingly, one in four employers think that morale has improved, but only 8% of employees agree with them.

7. What’s driving productivity – motivation or fear?
Nearly a quarter of employees report being more motivated at work than before the downturn (22%), but this may be spurred by fear. Nearly half of employers report an increase in productivity – by if this is caused by feeling a lack of job security this is not sustainable in the long term.

8. Lower satisfaction
One in five employees report being less satisfied with their jobs (22%) due to feelings of lower job security, pressure to deliver the same results with reduced resources, having to work longer with less recognition, and poor management.

HOW TO MANAGE EMPLOYEES IN A RECESSION

1. Reward and recognition required
One in five employers (21%) indicate that recognising top performing employees is one of the best strategies for rewarding and retaining talent. Training and development (particularly) in-house offerings is another focus of employers’ retention strategies, with 39% of employers implementing coaching and mentoring programmes during the downturn and 32% offering more professional training and development.

2. Different approaches for the generations
Generation Y has responded the most positively to the downturn and have reported the biggest increases in value placed on their job, motivation, satisfaction and loyalty.

3. Upskilling front-line managers
Communication through formal channels is important, but should work together with informal communication from direct managers.

Training and developing front-line managers – they are the key to building an engaged workforce. Leading in these times is different to the good times, so managers may not necessarily have the skills required and will need training and support. Employers need to equip managers so they can empower their teams and foster trusting relationships so that they can be rewarded with insights into levels of engagement in the team which they can use to improve performance and retention.

The downturn has made employees more aware of the importance of developing their skills, making training and development an important part of any organisation’s retention strategy

Six steps to good communication as identified by employees transparency; consistency, regularity, proactivity, reciprocity, positivity.

Optimistic outlook
Despite everything companies’ outlook is cautiously optimistic (63%). Two-thirds of companies believe their business will survive the downturn unscathed (68%) and two out of five believe the downturn will make their business stronger. Many people believe the economy will soon begin to recover with 61% believing their business will start to pick up in 18 months.

ENDS

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