Trends in employment practices necessary or short-sighted

September 28, 2009
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As consultants to business, our role is always to help businesses do better in a way that supports the long-term goals of the organization. In today’s vernacular, the buzz word is “sustainability.” Bringing effective advice to owners and managers in the current economic environment is a challenge.

The immediate pressures are a bit like the old expression that when a man is drowning, you throw him a life preserver; you don’t try to teach him to swim. Consequently, much of the current focus is on cost cutting, getting more output from fewer resources, etc.

This has a number of very positive aspects to running a business or organization — one of which should be that “lean” makes sense now, as well as in more positive economic times. Let’s not forget these lessons as conditions change.

However, we might also want to think about some other lessons learned the hard way over time. A recent report by a government agency said there are more people below the poverty line now than in the last 12 years, and that median income has also dropped substantially. These numbers don’t even reflect the disaster of financial events from last year, but were the results after an eight-year expansion of business. We can expect more of the same in next year’s numbers. The number of people employed isn’t getting any better either; the direct linkage to earnings.

Some trends that are not being reported at this time are ones that may have even greater impact down the road. From a human resources perspective, we are seeing fewer people raising flags about business practices than a few years ago. We see cartoons about people with H1N1 virus going to work because they don’t want to be labeled a “slacker.” And we see the willingness of Congress to address financial controls to prevent a repeat of the economic crash dramatically dropping. 

Finally, we see a number of business practices that are difficult to discern if they are necessary or opportunistic: organizations filing for bankruptcy to shed liabilities they took on in a “pass-through environment”; benefit reductions such as no 401(k) match; vacation banks eliminated; wage cuts and bonus elimination for the low end of the wage scale. They are opportunistic because they can do these things, still get people to toe the line, and have limited negative social stigma. Everybody is doing it.

Organizations are also buying other companies at bargain prices. It may be a good deal and a strategic decision. But if they are cutting back on wages, benefits or working conditions at the same time, employees will feel the purchase is on their backs and will resent it.

Why would a person wanting to help business raise such issues? Because we believe this is a trend that can have dire consequences down the road. Employees who believe they have been taken advantage of when they are not in a position to resist will find a way to get back what they think they have lost in some subtle and not-so-subtle ways. It also plays into the hands of unions. Loyalty will be gone and customers will see or feel this. In the long run, the gains will disappear and a business will be the poorer for it.

If the cutbacks or other financial actions that are happening are the result of necessity or as part of a business strategy that will improve long-term sustainability, that is another matter. However, unless you take the time to communicate with your employees and explain what is happening and why, the perception among employees will be negative. You may be looking out for their welfare, but the reality is that, unless you talk to them and convince them of what you are doing, the unintended outcome may be a pretty standard perception: Management always wins, employees always lose. If you’ve had good employee relations in the past, it will be a difficult task to gain back employee trust — if you care. 

Smart businesses do care; they don’t short-change their employees. Business in today’s competitive market needs employees who will make an extra effort for the organization. If they are not part of the team, business in other countries will eat our lunch.

Take the initiative to look at what you are doing from the employee’s perspective. Employees are very financially aware these days and they want to work for a successful organization. Include them in the discussions and they will help and respect you for your efforts.

Ardon Schambers is a principal with P3HR Consulting & Services LLC.

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