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Employee Morale, by Rod Eames
From Issue Three of our newsletter.
The motivation of employees in an organisation is predicated on the psychological contract between the two. In other words, employees need to feel they can trust their employer to look after their best interests and provide job satisfaction, and also that their employer trusts them in return.
What employees are concerned about right now
In most companies, the state of the psychological contract is positive, but there are forces which threaten this. Firstly, there has been a dramatic fall in levels of employee trust, largely due to the negative effects of Enron and the ‘fat cat’ earnings gap. The BA ground-crew strikes demonstrated the problems inherent in using increased management control rather than creating a climate of trust, which cost BA about £30 million. A recent survey (1) by the Chartered Institute of Personnel and Development (CIPD) found that 38% of all employees “trust senior management only a little or not at all to look after their best interests”.
Secondly, the Work Foundation, a leading analyst of the modern workplace, has charted a long-term decline in levels of employee morale, and the CIPD has found “a long-term trend of declining employee satisfaction at work”.
Thirdly, we are putting in longer office hours than anyone else in Europe (2), a trend which almost half the workforce sees as damaging to health and well-being.
Why these trends are happening
Commentators have noted a return to a “New Taylorism” (3), after Frederick Taylor’s early 20th century theory of work organisation that breaks jobs into narrow and repetitive tasks. Because managers are under pressure from shareholders to hit performance targets, they are increasingly investing in ways to check up on their staff and ensure that they are putting in the hours. This is particularly true where the organisation is losing business. Though understandable from a business point of view, the effect on employees is to raise their levels of dissatisfaction and stress.
Should we be worried about them?
These four elements of reduced trust, morale, satisfaction and increased levels of pressure are damaging UK business performance. This may seem an unduly pessimistic statement to make, but we all know about the impact that de-motivated employees have on customer service, and of the challenge of retaining highly talented workers in a negative work environment.
In addition, the research clearly demonstrates a powerful link between employee attitudes and business performance. A study by the Centre for Economic Performance showed that companies using the full range of HR practices, including team-working, staff development and employee consultation, benefited in two ways: they produced significantly more satisfied and productive staff, and they were 25% more profitable (4). Yet the creation of a healthy psychological contract is a core objective of only half of UK organisations (5) .
Our contention is that, in a highly competitive climate, no organisation can afford to ignore the creation of a positive psychological contract with its staff as an essential foundation for increased profitability.
How we improve employee attitudes
Firstly, we need a framework within which to do it. We need to ignore quick-fix gimmicks and develop the basis for a positive psychological contract.
The psychological contract is the unwritten employment contract that exists between employer and employee, based on a set of mutual expectations of behaviour from both parties. Trust, fairness and delivery are key ingredients in the relationship, which is dependent on the behaviour of individual managers towards their people.
At Nelson Consulting, we can review your current organisational situation, and specifically help you to:
Analyse the exact state of the psychological contract within the organisation,
Identify exactly what employees’ views are on a whole range of factors,
Develop good management processes and HR policies that will address the needs both of employees and of the business,
Create a management strategy underpinned by effective processes which will deliver the attitudinal changes needed for performance improvement.
Companies who take action will put their employees centre-stage in the business, and create the conditions for real improvements in employee morale. The HR function may then become a true enabler of competitive differentiation.
1 Pressure at Work and the Psychological Contract. CIPD 2002.
2 ICM Observer poll 2003
3 Hutton 2003.
4 The Impact of People Management Practices on Business Performance, CIPD 1997
5 The Work Foundation 2003.
Click here for a profile of Rod Eames.