Recession has destroyed trust in employers
Published: August 26, 2010
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It’s been a rough recession, and American management hasn’t always been a shining example of ethical behavior.
That’s the upshot of the management mega-consultancy Deloitte in its 2010 Ethics & Workplace Survey. According the survey, nearly half (48 percent) of employed Americans who plan to look for a new job when the economy is more stable cite a loss of trust in their employer — as a result of how business and operational decisions were handled over the last two years — as a reason for leaving.
“Business leaders should ... work to reinforce the importance of trust, transparency and professional ethics,” noted Deloitte chairman Sharon Allen. “It is important for leadership to foster values-based cultures by truly setting the tone at the top.”
The results echo a study that came out earlier in the year by another consultancy, Maritz Research, which showed that few employees (11 percent of those polled) strongly agreed their managers show consistency between their words and actions and a mere 7 percent of employees strongly agreed they trust senior leaders.
“You’ve got to maintain credibility with your workforce as a means of getting them to totally buy in to the mission and vision of your company,” explained Dr. Rick Garlick, senior director of consulting and strategic implementation at Maritz’s hospitality research group. “Anything less fosters a disengaged workforce that puts self-interest at the top of its list of priorities.”
“This is a major problem for both the obvious reason of unwanted turnover, and for a second, perhaps less obvious reason,” said Laura S. Hertzog, director of equal employment opportunity/diversity and inclusion in the human capital development programs in the industrial and labor relations department at Cornell University. “Unwanted turnover results in substantial replacement and retraining costs, loss of intellectual capital and possible delays in completion of projects and lack of cohesion as team members are lost. The second, perhaps more difficult problem, is the employees who want to leave, but cannot.
There is substantial concern that the economic recovery is not as robust and will not be as rapid as some have recently hoped. If that is the case, a substantial percentage of that 48 percent of employees will want to leave, but will be unable to find new employment. Therefore, employers will have a significant number of employees who want to work elsewhere but feel trapped. This is bad for morale, and bad for productivity, and could be very damaging to company results.
But Kendra Van Nostran, director of account research for Campbell, Calif.-based CKR Interactive, thinks isn’t ready to predict disaster across the board.
“I think it’s always difficult to accurately predict how significant workforce problems may or may not become,” she said from her office in Austin, Tex. “However, I do think that employers in certain industries, those that have been generating jobs, will find that this will become a very big problem in the next few years.” She cites heath-care workers — especially nurses — and IT workers as two job categories where employers could see plenty of departures.
Lack of trust often results when the management is not giving employees a full and accurate picture of where the company stands. “Lack of transparency in communications” was an issue for 46 percent of respondents in the Deloitte poll.
“There are times when the C-suite may decide that it is best to filter the information that is shared with employees, particularly during tough times,” added Vicky Ribon, a Florham Park, N.J.-based team manager at Administaff, headquartered in Houston, Tex. “They rationalize this decision as a way of protecting their employees from the reality of the situation. However, they may actually be creating an environment of mistrust and fear. An important role of the human resource team is to address the issues of employee communication with management. The C-suite should be made aware that a lack of transparency can poison relationships between management and employees, which can result in an exodus of employees and ill will in the marketplace.”
When this becomes an issue, it often falls to HR executives to explain the problem to the C-suite. It’s a delicate mission.
“The best way (HR departments can) convey the seriousness is to provide specific information on the tangible costs of turnover,” Cornell University’s Hertzog argued. “When they are told that ‘people are unhappy’ and likely to leave, top execs often assume/hope that the only people leaving will be the people they don’t value. They need to be advised that: (a) top employees may leave and take their intellectual capital with them; and (b) even those who are not valued are expensive to replace, particularly in large numbers.”
Even if the hoped-for recovery is only sputtering, it may be time to start heading off a rush for the door.
“Employers should absolutely start working on initiatives to address this,” CKR Interactive’s Van Nostran said. “They can start by conducting employee surveys and interviews to find gauge what the level of trust is at their organizations and pinpoint what some of the major workplace issues are.
Identify the workers who are at the greatest risk for leaving and find out what they can do to keep them.
Use this process to foster trust by being open and honest about what you are doing. Share the findings of the survey with your workforce and update them regularly on your progress.”
“Employers need to carefully evaluate their business practices and review their policies and communications with employees,” Administaff’s Ribon added. “The weak economy has caused tremendous stress and fear among employees. The employer who recognizes this and takes steps to effectively communicate with employees will have a better chance of retaining top talent in the future.”
Hertzog advises employers to use “whatever tools the organization has to diminish the ‘us and them’ dynamic. “Companies that pride themselves on their product innovation should focus some of those innovation skills on coming up with new ways to win the allegiance, not only of their customers, but of their own employees.”
