Critically Evaluation Of The View That During Times Of Recession And Economic Downturn, Employee Commitment Can Be Assured With A Steady Income The WritePass Journal

Critically Evaluation Of The View That During Times Of Recession And Economic Downturn, Employee Commitment Can Be Assured With A Steady Income Introduction Critically Evaluation Of The View That During Times Of Recession And Economic Downturn, Employee Commitment Can Be Assured With A Steady Income ). Whilst these strategies may be employed, our in interest in this paper is critically evaluating whether employee commitment can be assured with a steady income during such times of recession and economic downturn. A large number of studies have pointed out to the adverse impacts of cost cut measures that include pay cuts. According a Right Management Survey (2010) conducted on North American workers, 60% of the 900 respondents surveyed indicated their intent to leave their current employer as soon as there was an improvement and recovery of the economy. Similar conclusions have been reached upon by subsequent studies across the globe. A recent ORC International research on Australian companies showed a significant decline in employee engagement, with Australian organizations lagging behind other industrialized countries in employee engagement levels (Conrad 2012). The importance of maintaining a stable income to ensure a committed and motivated workforce is further evident in Britain where research has painted a worrying picture of a standstill Britain. In the UK, the level of employee engagement dropped significantly during the recession. According to a quarterly Employee Outlook survey report (2010), employee engagement levels reached an all-time low in the UK, with job satisfaction falling to 35 in 2010, down from 48. These findings have been confirmed by another Global Workforce Study (GWS) by Towers Watson which surveyed 2,628 workers in the UK. The study found 26% of the workers feeling stuck in their role, 40% wanting to leave their current jobs, and a vast majority of 77% arguing that their ability to adva nce their careers had worsened (Towers Watson, 2012). Adding to these concerns, only a third of the workers surveyed thought of their organization as providing good pay and opportunities for career development. Worryingly, 66% felt that there was no clear link between performance and pay, indicating the lack of incentive for motivating the workers (Towers Watson 2012). As pointed out by Yves Duhaldeborde, the head of surveys at Towers Watson, the research paints a worrying picture as workers and businesses reach a standstill with creativity and ambition taking a back seat. The post recession reality is that many of the workers have hit ambition ceiling and are choosing a steady income over creativity and career advancement. Several other studies have shown pay to be the most effective motivator. In their meta-analysis, Locke et al (1980) concluded that money was the most crucial incentive and effective motivator than other incentives. This finding has received support from subsequent researches. However, research on this topic has produced mixed results. Studies arguing against stable income as an effective motivator Contrary to the popular view, some studies have shown that pay is not necessarily an essential motivator. For example, in a survey by Towers Perrin (2005) which identified some of the top ten motivational factors, pay was not listed among the list. Among the top five motivators identified by the survey were: managers interest in the well being of its workforce, challenging work, customer focus and decision-making authority (Rynes et al. 2004). moreover, whilst a large number of studies have shown that recession impacted negatively on employee engagement with most of the workforce worried about layoffs and decreases in their income, new research from Gallup has shown that the fear may not have been as dramatic as publicly pronounced. The Gallup study found that, despite the intense recessionary pressures, employee engagement stayed fairly even and that employees remain confident of a trusting environment during this period (Cabtree 2011). Further, a similar study by Kelly International (2010) found that, contrary to the popular view, employee loyalty increased during the recession period with 52% of the North American work force remaining totally committed to their company. Most of these respondents argued that recession itself were responsible for heightening their loyalty. With the market slowly rebounding, businesses are on track to increase the salaries of their employees in order to retain their top talent. Although the prime focuses of engagement efforts seem to be based on financial rewards, it is not always the case that employee commitment can be assured with a steady income. Most of the organizations today still do not understand how to effectively engage their employees. As reported in a 2009 work survey by Deloitte Company, employees of today value meaningful work, more open communication and connection to the organization more than high salaries. Employees who feel valued and connected to their organization are far more likely to remain actively engaged than slightly higher-paid employees. Whereas the income effect has an impact on employee engagement, its effect tends to wear off over months of discontent. This is further evident in a recent employee engagement survey conducted by WorldatWork in collaboration with the Hay Group and Loyola University Chicago. The survey found a weak relationship between base pay and employee engagement and commitment; compared to intangible rewards, incentives and leadership quality. The study concluded that non-financial rewards had a greater impact on employee engagement compared to financial rewards. Nonetheless, voluminous evidence obtained from several hundreds of studies have found a strong positive correlation between the two. Hence, it can be inferred that during times of recession and economic downturn, employee commitment can be assured with a stable income. Whereas pay on its own may not be sufficient in effectively engaging employees, assuring employees about stability of their income would support the emotional commitment of the workforce. Conclusion Many businesses have often succumbed to the pressures of maintaining the workforce amidst diminishing revenues especially when under intense recessionary pressure. Most companies have often ignored the critical need to ensure that cost cuts are done in ways that support the emotional commitment of the workforce. Such cost cutting measures certainly impact negatively on the workforce, often leading to decreased levels of employee engagement and loss of top talents. Businesses have to take a strategic approach to employee relations in order to retain their top talent and emerge as winners of the talent wars. Cost reduction should thus be done in ways that reinforces company culture and integrates emotional commitment of the workforce with the business imperatives. Before implementing any cost reduction strategies, executives have consider whether such strategies would damage their value proposition to employees, thereby affecting their motivation and commitment which eventually results in disengaged employees. Although some studies have shown that pay is not necessarily an essential motivator and that employees tend to value meaningful work, more open communication and connection to the organization more than high salaries, voluminous evidence obtained from several hundreds of studies have found a strong positive correlation between the two. Based on this analysis, we conclude that maintaining a stable income during such hard times of recession and economic downturn would certainly help to keep engagement levels relatively high. Reference Aon Hewitt, 2013. 2013 Trends in global employee engagement. [viewed on 17th October 2013} available from www.onhewitt.com Aon Hewitt, 2010. 2010 employee engagement survey. Aon Hewitt Firm Bewley, T.F., 1998. why not cut pay? European Economic Review 42, pp.459 490 Bromfield, P., 2008. Energizing employees in recessionary times try motivating, not mandating. Booz Company Cataldo, P., 2011. Focusing on employee engagement: how to measure it and improve it. UNC Executive Development Chartered Institute of Personnel and Development (CIPD), 2006. How engaged are British employees. London: CIPD. Conrad, S., 2012. Driving employee engagement post-recession: best practices for Australian companies. [viewed on 14th October} available from http://blog.halogensoftware.com/driving-employee-engagement-post-recession-best-practices-for-australian-companies Crabtree, S., 2011. The recessions impact on US employees. Gallup Business Journal Harter, J. K., Schmidt, F.L., Hayes, T.L., 2002. Business-Unit Level Relationship Between Employee Satisfaction, Employee Engagement and Business Outcomes: a Meta Analysis. Journal of Applied Psychology. 86(2): 286-279. Hay Group, 2010.The loyalty deficit: the impact of recession on engagement. Hay Group Kelly International, 2010. Employee loyalty rises during global economic recession. [viewed on 18th October 2013} available from http://ir.kellyservices.com/releasedetail.cfm?ReleaseID=450036 Kumar, P. and Swetha, G., 2011. A prognostic examination of employee engagement from its historical roots. International Journal of Trade, Economics and Finance, vol.2 (3) pp.232-238 Locke, E.A., Ferren, D.B., McCaleb, V.M., Shaw, K.N. and Denny, A.T., 1980. The relative effectiveness of four methods of motivating employee performance. In: Duncan, K.D., Gruenberg, M.M. Wallis (Eds), changes in working life, New York: Wiley publishers. Macey, W.H and B. Schneider. 2008. The Meaning of Employee Engagement. Industrial and Organizational Psychology. 1: 3-30. Maslow, A.H., 1943. A theory of human motivation. Psychological Review, 50, pp.370-396 Peacock, L., 2010. Recession over but employee engagement hits all-time low, CIPD warns. [Viewed on 14th October 2013] available from personneltoday.com/articles/26/01/2010/53802/recession-over-but-employee-engagement-hits-all-time-low-cipd-warns.htm Quantum workplace report, 2012. Employee engagement trends report. Quantum Workplace Quarterly Survey report, 2010. Employee outlook: emerging from the downturn? CIPD Reem, Y., 2011. Motivating public sector employees. Working papers no. 60 Rehan, M.F. and Islam, T., 2013. Relationship between organizational commitment and citizenship behaviours. World Journal of Management and Behavioural studies 1 (1), pp.24-32 Schroeder-Saulnier, D., 2010. Reengaging Employees in a Post-Recession World, Best Practices in HR, Robinson, D., S. P. Perryman and S. Hayday. (2004). The Drivers of Employee Engagement. IES Report 408. {Viewed on 16th October 2013} Retrieved from employment-studies.co.uk/summary/ Roche, W.K., Teague, P., Coughlan, A., Fahy, M., 2006. Human resources in the recession: managing and representing people at work in Ireland. Oxford: Routledge Rousseau, D. M. and Tijoriwala, S. A., 1998. Assessing psychological contracts: Issues, alternatives, and measures. Journal of Organizational Behavior, 19, 679-695 Rynes, S.L., Gerhart, B., Minette, K.A., 2004. The importance of pay in employee motivation: discrepancies between what people say and what they do. Human Resource Management, vol.43, pp.381-394 Schneider, B., W.H. Macey, K.M. Barbera and N. Martin. 2009. Driving Customer Satisfaction and Financial Success through Employee Engagement. People and Strategy. 32(2): 22-27 Scott, D., McMullen, T., Royal, M. and Stark, M., 2010. The impact of rewards programs on employee engagement. WorldatWork Tesvich, L.K. And Morrow, C., 2010. HRs challenge: engaging employees post-recession. The Linkage Leader. LKT Consulting, Inc. and Sage Assessments. Tower Watson, 2012. Global study warns of standstill Britain as workers and businesses hit ambition ceiling. {viewed on 14th October 2013} available from towerswatson.com/en-GB/Press/2012/07/global-study-warns-of-standstill-britain-as-workers-and-businesses-hit-ambition-ceiling TOWERS PERRIN, 2005. Reconnecting with employees: quantifying the value of engaging your workforce. London: Towers Perrin Towers Perrin, 2009. closing the engagement gap: a road map for driving superior business performance: Tower Perrin Global Workforce Study 2007-2008 Towers Watson, 2012. Global workforce study: engagement at risk: driving strong performance in a volatile global environment. Wellins, R.S., Bernthal, P., Phelps, M., 2007. Employee engagement: the key to realizing competitive advantage. Development Dimensions International, Inc. Truss, C., Soane, E., Edwards, C., Wisdom, K., Croll, A. and Burnett, J. (2006) Working Life: Employee Attitudes and Engagement 2006. London, CIPD. Critically Evaluation Of The View That During Times Of Recession And Economic Downturn, Employee Commitment Can Be Assured With A Steady Income Introduction Critically Evaluation Of The View That During Times Of Recession And Economic Downturn, Employee Commitment Can Be Assured With A Steady Income ). Whilst these strategies may be employed, our in interest in this paper is critically evaluating whether employee commitment can be assured with a steady income during such times of recession and economic downturn. A large number of studies have pointed out to the adverse impacts of cost cut measures that include pay cuts. According a Right Management Survey (2010) conducted on North American workers, 60% of the 900 respondents surveyed indicated their intent to leave their current employer as soon as there was an improvement and recovery of the economy. Similar conclusions have been reached upon by subsequent studies across the globe. A recent ORC International research on Australian companies showed a significant decline in employee engagement, with Australian organizations lagging behind other industrialized countries in employee engagement levels (Conrad 2012). The importance of maintaining a stable income to ensure a committed and motivated workforce is further evident in Britain where research has painted a worrying picture of a standstill Britain. In the UK, the level of employee engagement dropped significantly during the recession. According to a quarterly Employee Outlook survey report (2010), employee engagement levels reached an all-time low in the UK, with job satisfaction falling to 35 in 2010, down from 48. These findings have been confirmed by another Global Workforce Study (GWS) by Towers Watson which surveyed 2,628 workers in the UK. The study found 26% of the workers feeling stuck in their role, 40% wanting to leave their current jobs, and a vast majority of 77% arguing that their ability to adva nce their careers had worsened (Towers Watson, 2012). Adding to these concerns, only a third of the workers surveyed thought of their organization as providing good pay and opportunities for career development. Worryingly, 66% felt that there was no clear link between performance and pay, indicating the lack of incentive for motivating the workers (Towers Watson 2012). As pointed out by Yves Duhaldeborde, the head of surveys at Towers Watson, the research paints a worrying picture as workers and businesses reach a standstill with creativity and ambition taking a back seat. The post recession reality is that many of the workers have hit ambition ceiling and are choosing a steady income over creativity and career advancement. Several other studies have shown pay to be the most effective motivator. In their meta-analysis, Locke et al (1980) concluded that money was the most crucial incentive and effective motivator than other incentives. This finding has received support from subsequent researches. However, research on this topic has produced mixed results. Studies arguing against stable income as an effective motivator Contrary to the popular view, some studies have shown that pay is not necessarily an essential motivator. For example, in a survey by Towers Perrin (2005) which identified some of the top ten motivational factors, pay was not listed among the list. Among the top five motivators identified by the survey were: managers interest in the well being of its workforce, challenging work, customer focus and decision-making authority (Rynes et al. 2004). moreover, whilst a large number of studies have shown that recession impacted negatively on employee engagement with most of the workforce worried about layoffs and decreases in their income, new research from Gallup has shown that the fear may not have been as dramatic as publicly pronounced. The Gallup study found that, despite the intense recessionary pressures, employee engagement stayed fairly even and that employees remain confident of a trusting environment during this period (Cabtree 2011). Further, a similar study by Kelly International (2010) found that, contrary to the popular view, employee loyalty increased during the recession period with 52% of the North American work force remaining totally committed to their company. Most of these respondents argued that recession itself were responsible for heightening their loyalty. With the market slowly rebounding, businesses are on track to increase the salaries of their employees in order to retain their top talent. Although the prime focuses of engagement efforts seem to be based on financial rewards, it is not always the case that employee commitment can be assured with a steady income. Most of the organizations today still do not understand how to effectively engage their employees. As reported in a 2009 work survey by Deloitte Company, employees of today value meaningful work, more open communication and connection to the organization more than high salaries. Employees who feel valued and connected to their organization are far more likely to remain actively engaged than slightly higher-paid employees. Whereas the income effect has an impact on employee engagement, its effect tends to wear off over months of discontent. This is further evident in a recent employee engagement survey conducted by WorldatWork in collaboration with the Hay Group and Loyola University Chicago. The survey found a weak relationship between base pay and employee engagement and commitment; compared to intangible rewards, incentives and leadership quality. The study concluded that non-financial rewards had a greater impact on employee engagement compared to financial rewards. Nonetheless, voluminous evidence obtained from several hundreds of studies have found a strong positive correlation between the two. Hence, it can be inferred that during times of recession and economic downturn, employee commitment can be assured with a stable income. Whereas pay on its own may not be sufficient in effectively engaging employees, assuring employees about stability of their income would support the emotional commitment of the workforce. Conclusion Many businesses have often succumbed to the pressures of maintaining the workforce amidst diminishing revenues especially when under intense recessionary pressure. Most companies have often ignored the critical need to ensure that cost cuts are done in ways that support the emotional commitment of the workforce. Such cost cutting measures certainly impact negatively on the workforce, often leading to decreased levels of employee engagement and loss of top talents. Businesses have to take a strategic approach to employee relations in order to retain their top talent and emerge as winners of the talent wars. Cost reduction should thus be done in ways that reinforces company culture and integrates emotional commitment of the workforce with the business imperatives. Before implementing any cost reduction strategies, executives have consider whether such strategies would damage their value proposition to employees, thereby affecting their motivation and commitment which eventually results in disengaged employees. Although some studies have shown that pay is not necessarily an essential motivator and that employees tend to value meaningful work, more open communication and connection to the organization more than high salaries, voluminous evidence obtained from several hundreds of studies have found a strong positive correlation between the two. Based on this analysis, we conclude that maintaining a stable income during such hard times of recession and economic downturn would certainly help to keep engagement levels relatively high. Reference Aon Hewitt, 2013. 2013 Trends in global employee engagement. [viewed on 17th October 2013} available from www.onhewitt.com Aon Hewitt, 2010. 2010 employee engagement survey. Aon Hewitt Firm Bewley, T.F., 1998. why not cut pay? European Economic Review 42, pp.459 490 Bromfield, P., 2008. Energizing employees in recessionary times try motivating, not mandating. Booz Company Cataldo, P., 2011. Focusing on employee engagement: how to measure it and improve it. UNC Executive Development Chartered Institute of Personnel and Development (CIPD), 2006. How engaged are British employees. London: CIPD. Conrad, S., 2012. Driving employee engagement post-recession: best practices for Australian companies. [viewed on 14th October} available from http://blog.halogensoftware.com/driving-employee-engagement-post-recession-best-practices-for-australian-companies Crabtree, S., 2011. The recessions impact on US employees. Gallup Business Journal Harter, J. K., Schmidt, F.L., Hayes, T.L., 2002. Business-Unit Level Relationship Between Employee Satisfaction, Employee Engagement and Business Outcomes: a Meta Analysis. Journal of Applied Psychology. 86(2): 286-279. Hay Group, 2010.The loyalty deficit: the impact of recession on engagement. Hay Group Kelly International, 2010. Employee loyalty rises during global economic recession. [viewed on 18th October 2013} available from http://ir.kellyservices.com/releasedetail.cfm?ReleaseID=450036 Kumar, P. and Swetha, G., 2011. A prognostic examination of employee engagement from its historical roots. International Journal of Trade, Economics and Finance, vol.2 (3) pp.232-238 Locke, E.A., Ferren, D.B., McCaleb, V.M., Shaw, K.N. and Denny, A.T., 1980. The relative effectiveness of four methods of motivating employee performance. In: Duncan, K.D., Gruenberg, M.M. Wallis (Eds), changes in working life, New York: Wiley publishers. Macey, W.H and B. Schneider. 2008. The Meaning of Employee Engagement. Industrial and Organizational Psychology. 1: 3-30. Maslow, A.H., 1943. A theory of human motivation. Psychological Review, 50, pp.370-396 Peacock, L., 2010. Recession over but employee engagement hits all-time low, CIPD warns. [Viewed on 14th October 2013] available from personneltoday.com/articles/26/01/2010/53802/recession-over-but-employee-engagement-hits-all-time-low-cipd-warns.htm Quantum workplace report, 2012. Employee engagement trends report. Quantum Workplace Quarterly Survey report, 2010. Employee outlook: emerging from the downturn? CIPD Reem, Y., 2011. Motivating public sector employees. Working papers no. 60 Rehan, M.F. and Islam, T., 2013. Relationship between organizational commitment and citizenship behaviours. World Journal of Management and Behavioural studies 1 (1), pp.24-32 Schroeder-Saulnier, D., 2010. Reengaging Employees in a Post-Recession World, Best Practices in HR, Robinson, D., S. P. Perryman and S. Hayday. (2004). The Drivers of Employee Engagement. IES Report 408. {Viewed on 16th October 2013} Retrieved from employment-studies.co.uk/summary/ Roche, W.K., Teague, P., Coughlan, A., Fahy, M., 2006. Human resources in the recession: managing and representing people at work in Ireland. Oxford: Routledge Rousseau, D. M. and Tijoriwala, S. A., 1998. Assessing psychological contracts: Issues, alternatives, and measures. Journal of Organizational Behavior, 19, 679-695 Rynes, S.L., Gerhart, B., Minette, K.A., 2004. The importance of pay in employee motivation: discrepancies between what people say and what they do. Human Resource Management, vol.43, pp.381-394 Schneider, B., W.H. Macey, K.M. Barbera and N. Martin. 2009. Driving Customer Satisfaction and Financial Success through Employee Engagement. People and Strategy. 32(2): 22-27 Scott, D., McMullen, T., Royal, M. and Stark, M., 2010. The impact of rewards programs on employee engagement. WorldatWork Tesvich, L.K. And Morrow, C., 2010. HRs challenge: engaging employees post-recession. The Linkage Leader. LKT Consulting, Inc. and Sage Assessments. Tower Watson, 2012. Global study warns of standstill Britain as workers and businesses hit ambition ceiling. {viewed on 14th October 2013} available from towerswatson.com/en-GB/Press/2012/07/global-study-warns-of-standstill-britain-as-workers-and-businesses-hit-ambition-ceiling TOWERS PERRIN, 2005. Reconnecting with employees: quantifying the value of engaging your workforce. London: Towers Perrin Towers Perrin, 2009. closing the engagement gap: a road map for driving superior business performance: Tower Perrin Global Workforce Study 2007-2008 Towers Watson, 2012. Global workforce study: engagement at risk: driving strong performance in a volatile global environment. Wellins, R.S., Bernthal, P., Phelps, M., 2007. Employee engagement: the key to realizing competitive advantage. Development Dimensions International, Inc. Truss, C., Soane, E., Edwards, C., Wisdom, K., Croll, A. and Burnett, J. (2006) Working Life: Employee Attitudes and Engagement 2006. London, CIPD.