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Engagement – deal or new deal?

It is an
indisputable fact that the employment landscape has radically altered in the
past year. Jenny Merry, UK Engagement Practice leader at Hewitt Associates,
discusses employee engagement and what ‘the deal’ will look like in the future.

Even organisations that have a relatively strong share price are finding that a
range of issues are impacting the current employee-employer relationship. For
example, the UK unemployment rate is escalating, not only making competition
for jobs fiercer but giving employers a bigger pool of employees to fish from.
Funding for pay increases has been cut back and many employers are asking
employees to take a pay-cut or work reduced hours in order to trim costs. Bonus
and pension plans are being
revised as well. Not only are financial rewards being impacted but training and
development budgets are coming under intense scrutiny, while support for career
progression is more limited. As many businesses struggle to survive, the focus
of leadership attention is, unsurprisingly, directed away from people practices
and towards managing the bottom line.

Businesses may continue to state and believe that ‘people are our greatest
asset’, but it is increasingly hard to deliver against this statement when
faced with the pressure to reduce costs. Employee commitment or loyalty depends
upon the employee ‘deal’, the relationship between employers and employees
being offered and, importantly, how organisations execute on the deal. In many
businesses, the employee ‘deal’ has at best changed and, in the worst cases,
been broken. Employees no longer trust that the promises of the past; pay
increases, bonuses, development etc will be delivered. Even more stable or
successful businesses are using the current climate as an opportunity to
increase efficiencies and reduce costs.

This broken or changing deal puts employee engagement levels at serious risk,
especially at the point when employers need their employees to be most
committed and productive. At Hewitt Associates, we are continuing to monitor
the engagement levels of our clients during the economic downturn. In the
period between January to March 2009, 31 percent of businesses reported a
decrease in employee engagement. This is almost double the level seen prior to
the global recession. The good news, however, is that 53 percent of employers
were able to deliver increased levels of employee engagement, on a par with
pre-recession figures. Our analysis reveals that failing to take steps to
recognise and address engagement issues and to regain employee trust will cause
engagement levels to decrease further and will seriously impact an organisation’s ability to
emerge from the downturn in a strong position.

So what tactics are employers using to
successfully increase engagement levels? Providing clarity about the ‘deal’ is
now on offer. This involves having a strategy and a plan around the broad range
of aspects such as personal development, the work environment, relationships
with colleagues, managers and senior leaders, financial rewards and the roles
on offer. There needs to be clarity about what employees need to do in return,
particularly with regard to more tangible aspects such as pay and bonuses.
Hewitt analysis points to a clear distinction between best employers where 84
percent of employees believe their managers hold them accountable to high
standards of performance as compared to other businesses where just over half
of employees have this same view. To rebuild trust, it is vital that there is
no over-commitment and certainly no under-delivering of the deal.

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