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Research shows that employee engagement is more important than ever in a challenging economy.

By February 17, 2010No Comments

Heres the High Level:

Professor David Guest at King’s College, who analysed the survey, says: “A key theme to emerge from the survey is that the notion of employee engagement is more important than ever and is set to be the big issue for 2009 and beyond. Redundancies, more assertive management, and cuts in pay and training are all likely to impact on levels of employee engagement.”

Here’s is the full article.  What you will find, is that employee engagment is critical. When you are ready to improve employee engagment, contact Grand Dynamics!  Enjoy. – Tim

City law firm Speechly Bircham has teamed up with King’s College London HRM Learning Board to conduct a survey of senior HR managers. The survey paints a challenging picture for UK businesses; it reveals the damage caused by the economic downturn to employee engagement with stress and claims of bullying and harassment on the increase, while pay, bonuses and training budgets are being cut.

The survey shows that, despite widespread workforce reductions continuing, 28% of organisations are still experiencing staff shortages. Interestingly when asked about the criteria for selecting people for redundancy, an employee’s absence record was cited as one of the top criteria. Maintaining employee engagement is cited as the biggest challenge facing bosses.

Reductions in pay and training budgets: 36% of respondents reported a reduction in the size of pay increases, with 33% having reduced the number of staff receiving a bonus and 45% reducing the size of the bonus pool; while 37% reported a reduction in training and development budgets.

Commenting on the findings, Richard Martin, employment partner at Speechly Bircham, said:

“Employers need to realise that although their immediate reaction may be to cut bonuses and pay pools, they do still need to invest in the safeguarding of their talent long-term.”

“One way they can do this is to try, wherever possible, to maintain existing training and development programmes, as cutting back on training will only bite back in the future when they are faced with a glut of underdeveloped staff. The ongoing need for specialist skills is particularly pertinent given the UK’s longstanding, wider skills crisis. The report identifies talent management as a key concern going forward as well as ongoing problems with a shortage of skilled staff. There is an obvious disconnect between a skills shortage on the one hand and a cut in training budgets on the other.”

Increasing workplace problems: 29% of senior HR managers reported an increase in levels of stress among employees, and almost a third of respondents reported an increase in employee relations problems including bullying, stress and harassment. Despite this, 25% reported a reduction in levels of sickness absence.

Richard Martin comments: “This is a clear rejection of the Benylin advert! While an increase in stress might usually be reflected in higher levels of sickness absence, staff appear to be more reluctant to take time off as they rightly realise this may expose them to greater risk in cutback programmes.”

“Employers need to be wary, however, of taking into account sickness absence caused by stress resulting from workforce bullying and harassment or they may be faced with claims.”

Redundancies and staff shortages: 42% of businesses reported redundancies in the past year, and of them, 80% had used compulsory redundancy. Despite this, 28% said they were still experiencing staff shortages – and that the problem lies in finding staff with specific qualifications/skills.

The effect of a trade union presence on grievances: Senior HR managers responding to the survey felt that, looking ahead to the next twelve months, the factor that makes the greatest difference to a rise in grievances is whether or not there is a trade union presence. 33% of those with a union presence expect an increase in the number of grievances compared with about 18% per cent of those with other forms of employee representation or no representation. This is particularly surprising as a union presence is not associated with the rise in grievances in the previous 12 months.

Tougher management and an increase in grievances: 29% of respondents reported an increase in grievances over the past year; 23% expect more to come in 2009. The main grievance issues cited were relations with senior and line management (18.5%) and bullying and harassment (15%). In the coming year, an 11% increase is expected in grievances associated with pay and conditions.

Richard explains: “There seems to be a real concern about grievances escalating considerably at a time when employee engagement is cited as a major concern. With the abolition of the statutory dispute resolution procedures as of April 2009, employers will have to continue to devote energy and attention to their internal dispute resolution processes. Managers must realise that aggressive management is not always the way to drive efficiencies across a business.”

“What is encouraging is that 42% of those who had made staff redundant in the past year, engaged in some form of collective consultation.”

Major business challenges: The top HR challenges for the next year are seen as: maintaining employee engagement (cited by a huge 58%), succession planning (44%), talent management (38%), managing redundancies (35%) and, perhaps surprisingly, managing growth and expansion (31%).

Professor David Guest at King’s College, who analysed the survey, says: “A key theme to emerge from the survey is that the notion of employee engagement is more important than ever and is set to be the big issue for 2009 and beyond. Redundancies, more assertive management, and cuts in pay and training are all likely to impact on levels of employee engagement.”

Recruitment decline: Half of all respondents said that there had been a decrease in general recruitment. However, interestingly only 17% reported a decrease in recruiting graduates.

Richard Martin explains: “In past recessions, one of the first steps taken was to cut graduate recruitment. When the economy recovered, employers realised they had missed out on a generation coming through the ranks. Employers appear to have learned their lesson and are maintaining at least some graduate recruitment for the moment.”

Impact on HR departments: The downturn has not hit HR departments themselves disproportionately – 25% say they have actually increased headcount over the past 12 months. Restructuring of HR departments continues apace. 38% had restructured in the previous year and 31% expect to do so in the next year.

Professor David Guest comments: “Contrary to expectations in such a volatile environment, is that a remarkable number of HR functions are satisfied with how they are able to influence their organisations and the support they receive. This would appear to be a good news story for HR professionals, who have sometimes been seen as the poor relation when compared to other functional areas.”

Stuart Woollard, Managing Director of King’s HRM Learning Board and co-author of the survey report comments:

“It is evident that organisations are facing serious workforce issues that are a direct fallout from the current economic environment. There are clear challenges here for management to grasp quickly and act upon to avoid damaging any strategy to ‘ride the recession’. Fortunately, HR functions appear to be anticipating potential problems such as disengaged employees and the impact of stress, which if left unchecked may have significant additional cost and performance implications for staff and businesses.”

“However, it will be interesting to see if HR can push these to the top of management agendas. HR functions will need to play a central role to drive actions that mitigate the negative outcomes that arise from this recession and help their organisations create a stable and engaged workforce that will take them through and beyond this exceptionally challenging period.”


Notes to editors

Riding the Recession? The state of HR in the current economic downturn is one of the most comprehensive surveys to date on the effect of the downturn on employers and their staff. The questionnaire was distributed to approximately 5,000 predominantly private sector senior HR managers in November 2008. 329 responses were received by early December in time for analysis. A large majority of the respondents hold the title of Human Resource Director or Head of HR. The data was analysed by Mike Clinton, David Guest and Stuart Woollard at King’s.

Speechly Bircham’s Employment group is a leading employment law practice meeting the diverse needs of a broad range of employer and senior employee clients. The employer clients include public and private companies, partnerships and other organisations, based in the UK and overseas, across a wide range of business and professional sectors, with a strong focus on financial services. The team handles sensitive and complex issues across the spectrum of the employment relationship. The group has specialist expertise concerning immigration issues and works closely with the firm’s pension and employee benefit teams. The team is highly regarded for its experienced, discreet and practical approach.

King’s HRM Learning Board is a world leader in providing effective and meaningful links between academia and the HR community. It provides a focus for mutually beneficial and productive long-term partnerships, bringing together academic experts and key leaders and professionals from industry and government. The Learning Board is a conduit to the latest global thinking, research, and learning in organisational analysis and HR management. It also enables access to the unique talent pool of academics, researchers and HRM students at King’s.

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