Posted by: William Davies

Tagged in: Corporate Strategy


The most significant workplace impact of the ecnomic crisis will be a greater mismatch between employee aspirations and the opportunities available


How can HR temper boom time language of enthusiasm and optimism with a 'new reality' narrative?

2012 marks the fifth anniversary of the economic events that triggered the depression that we’re now living through. We have no way of knowing how long this crisis will last, though the government’s own figures indicate that living standards in 2016 will be lower than in 2002. Many experts suggest that both public and private sectors may spend another decade trying to reduce their debts.

These will be the circumstances shaping Workplace 2020. The management rhetoric of the boom times stressed constant ‘change’ afflicting organisations, but this was of a very different order from the changes that are currently affecting Western economies, and which will potentially alter the relationship between management and employees.

The most significant implication of this economic crisis for workplaces will be an increased mismatch between the aspirations and the opportunities of employees, especially younger ones. Of course there will still be plenty of fulfilling, well-rewarded work around, but graduates will find it harder to come by, and they may have to settle for less. Others will be more concerned with just having a job, any job.

To make things tougher, evidence on attitudes and values of the new generation workforce suggest that many of these may be less realistic than their predecessors. Research commissioned by Cisco found that 70% of people in their 20s believe that they should only have to be physically present in an office for a specific reason. No doubt teleworking is here to stay, and may even increase; but there are large swathes of the labour market where the ‘new economy’ vision of digitally-enabled, autonomous workers does not hold.

The pursuit of ‘employee engagement’ will remain critical under these circumstances, but could be tougher to achieve than ever before. CIPD research shows that there is already a latent cynicism in the UK workforce regarding communication with senior management and the transparency of decision-making in many firms. Business is suffering a major shortage of moral legitimacy right now, not aided by the fact that directors awarded themselves a 49% pay increase last year.

One question for managers is whether they can face up to the ‘new realism’ that will sweep the UK economy over the next decade. This will mean accepting that money has to be earned through hard work, whether at the national, organisational or individual level. It means accepting some uncomfortable truths, regarding job insecurity, standard of living and pensions. Two things in particular are likely to assist in getting through this.

Firstly, core issues of corporate governance, ownership and voice in organisations are back on the agenda. The idea of placing employees on remuneration committees is being seriously considered by policy-makers from across the political spectrum. Workplace democracy, via forms of employee ownership and works councils, is making a comeback in both the public and the private sectors. Successful organisations of the future may be ones that have been fundamentally rearranged so as to recognise the value contributed by employees.

In my research on employee-owned firms (see Reinventing the Firm available on the Demos website) I’ve discovered that many managers in these organisations don’t even recognise employee engagement as a problem. If anything, they are more likely to suffer from too much engagement, rather than insufficient. The ‘psychological contract’ between management and workforce takes care of itself, when employees are also owners, with the rights and responsibilities that go with that.

Secondly, the next decade may require the HR profession to speak a different type of language. At present managers and HR experts trade in the language of enthusiasm and optimism: ‘engagement’, ‘leadership’, ‘teamwork’, ‘reward’, ‘recognition’. By a happy coincidence, these all benefit the bottom line. In which case, why do so many British workplaces neglect them so badly?

Many managers and employees simply don’t accept that these issues are business fundamentals, and see them as ‘soft’. A harsher economic climate will exacerbate this problem, placing organisational survival and job security at the forefront of many minds. The HR profession may need to meet this more fearful audience halfway, and offer a narrative about the new reality, which isn’t entirely win-win.

Building trust in fearful, pessimistic cultures is especially difficult. It cannot be done simply through asserting the value of trust, less so by asserting its value to the ‘bottom line’. A crisis such as the current one will produce as-yet unforeseeable changes in the structure, governance and employment methods of organisations. Great imagination will be needed on the part of managers, employees and HR professionals, to rethink the nature of organisations in ways that place an honest value on the contribution of a workforce. 

William Davies is Academic Director at the Centre for Mutual and Employee-owned Business, University of Oxford and an Associate at Demos.

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