If employees are harbouring feelings of anger, disappointment and frustration towards their employer, then organisations can expect productivity to suffer. It also doesn’t take much to turn a star performer into a disenfranchised employee, if they feel that they have been let down and no longer trust their employer. Organisations therefore need to do everything they can, particularly in times of economic downturn and instability, to maintain employee trust, so even when difficult decisions have been made, employees feel that employers have their best interests at heart. Trust is built on employers keeping their promises to employees and acting in a way that is perceived as fair and just. When organisations fail to do this and the psychological contract between employee and employer breaks down, negative feelings and behaviours can ensue.[1]
Voting with their feet
The tough economic climate has forced many organisations to restructure in a bid to drive down costs and make savings. A recent survey of 1000 people in full time employment, carried out on behalf of Capita, revealed that more than half (52%) of people surveyed had already been through a large scale organisational change programme. In addition, more than one in four (28%) are currently seeking alternative employment. When asked why they were looking for a new job, 44% said it was because they no longer trusted their employer.
It would seem that many employees affected by change programmes perceive that they are being poorly managed and that employers are disregarding the psychological contract. As the survey showed that as a direct result of restructuring, employees reported feeling:
- uncertain about their future in the organisation (50%);
- stressed (40%);
- less committed to their job and employer (25%);
- angry (21%); and
- even betrayed (17%).
Worryingly, this is a view held by the survivors of restructuring programmes.
Talent gaps
The effect of a disenfranchised workforce on an organisation’s productivity is significant. Job uncertainty can lead to the more skilled employees, who are more desirable and therefore able to get a job elsewhere, leaving the organisation. This then leads to talent gaps and potentially further dissatisfaction amongst the remaining staff, as fewer employees are required to do yet more work. Poor staff retention will also have a cost implication, as organisations will have to spend money on recruitment and retraining. In addition, disenfranchised employees are more likely to work strictly to their written contract and be unwilling to take on extra work, responsibilities or work overtime. Ironically therefore, as organisations look to restructure in a bid to be more efficient, they may find that they incur higher costs as productivity and staff retention dwindles.
Be honest
To build trust and keep employees on side, it is important that organisations are upfront and transparent about the changes from the very beginning. They should use their best endeavours, within the limitations of commercial confidentiality, to communicate the reasons for the change and ensure that they are in line with the overall organisational objectives and values.
Consult, consult
During the period of change, it is also critical to have an interactive consultation process, building trust between employee and employer. It is worth keeping in mind that employees can often provide valuable information and insight around what changes are needed, as they see the organisation from a different perspective. In addition, if possible, organisations should think about giving employees the chance to assess whether the planned changes are viable. In creating these forums for debate the organisation may be able to assess whether the planned changes will yield the best results. Also by opening up the floor to employees in this way they are more likely to feel involved and therefore engaged.
Organisations should make sure that that those directly impacted by the change are given the opportunity to raise their concerns and receive the appropriate counselling and support. The employee should understand why the changes are being made and why they have been directly impacted as opposed to another employee in a different part of the business. Holding face-to-face meetings, on a one to one basis, with those affected, will help to secure feelings of perceived fairness, even when difficult decisions have had to be made. Organisations are often better at doing this for those employees that might be losing their jobs, mainly due to the legalities surrounding redundancy. However, they should remember it’s not just about those that will be leaving, but also those who the organisation intends to keep after the change has been implemented.
Managing change
The economic climate will see an increasing number of organisations having to make tough decisions, which may in some cases lead to restructures. However, if they are to survive long term, they will need their workforce to be engaged and motivated. To achieve this, organisations must make sure that the process of change is managed well and that, where possible, organisations respect the employee-employer psychological contract by keeping promises and maintaining trust.
[1] See also: ‘Inside their minds’ by Mike Wellin in The People Bulletin, 18 November 2009.