Employee Stress Can Add to Performance Risk

As the global recession wears on, employees are feeling increasing stress in the workplace that, if left unchecked, could impact business performance, according to Towers Perrin's Workplace Watch, a new quarterly report on employee opinions.

The report, based on opinions of more than 650,000 employees in a variety of organizations around the world, compares updated data for the first quarter of 2009 with the five preceding quarters. The information provides a number of useful insights to help employers evaluate how the economic downturn is affecting employees' attitudes about work and levels of engagement.

Only 55% of workers in the first quarter agreed that they could balance work and personal responsibilities, down from 62% in the final quarter of 2008.

Interestingly, though, increased anxiety about work/life balance doesn't appear to be a function of a change in company policies. Fully 70% of employees also agree that their work schedules give them sufficient flexibility to meet personal and family needs — a percentage virtually unchanged over the preceding year. This suggests employees can't, or won't, take advantage of the flexibility they do have and may be putting pressure on themselves to work longer hours, whether to deal with expanded workloads, help overtaxed colleagues or protect their jobs.

Engagement levels hold steady

More importantly, employee engagement — a key indicator of organization performance — held steady through the first quarter of this year. While the global engagement gap that Towers Perrin has measured and tracked for more than a decade remains, the current crisis has not, surprisingly, widened that gap. Contributing to this outcome is the fact that employees are actually clearer about their job responsibilities and have more confidence in their long-term career opportunities now than a year ago.

Favorable trends despite harsh economy

During the first quarter of 2009, favorable scores rose slightly on a range of items relating to organizational efficiency, communication, company reputation and frontline supervisors, all of which contribute to positive engagement:

• Almost three-quarters (74%) of employees agree their company's structure facilitates efficient operations, up from 66% in the last quarter of 2008 and 58% in the first quarter of 2008, suggesting the latest rounds of restructuring have been done thoughtfully and in a manner that doesn’t automatically demand doing more with less.
• At the same time, 91% understand how their work helps the company achieve its immediate objectives, a view that has held fairly steady over the six quarters studied.
• Over two-thirds (68%) feel their company offers long-term career opportunities for them, up from 60% at the beginning of 2008.
• More than three-quarters (77%) agree their company is highly regarded by customers, up from 73% the prior year as well, suggesting employees recognize the efforts their companies are making to connect with the marketplace in this tough economy.

Widespread understanding among employees

These results show that many employees "get it" in terms of what the company has to do in the short term to weather the economic downturn. They understand that the recession has required sacrifices, and they're willing to do what's needed to help their employer succeed — in part because they want to ensure their own continued employment.

The fact that companies don't yet face a growing gap in engagement is especially welcome news, particularly given the strong relationship between high engagement and high performance.

However, the fact that the engagement gap shows no signs of narrowing is a warning flag to companies since an "all hands on deck" mindset is essential right now, given the ongoing global slump. Moreover, complacency about current engagement levels opens a company to significant risk that it will fall behind competitors, both in performance and talent retention, as the economy starts to rebound.

Engagement warning signs

In other critical areas linked to engagement and performance, a less positive picture emerges. Favorable views about leadership — the top driver of employee engagement — are down in some key areas:

• Most notably, the percentage of employees agreeing top management provides a clear sense of direction dropped significantly, to 63% from 71% in the fourth quarter of 2008.
• The percentage of employees agreeing that top management provides effective leadership also declined to 50% from 56% at the end of 2008.
• In addition, only 69% of employees agree that they clearly understand their company's broad goals, down a striking 10 percentage points from 79% in the fourth quarter of 2008.

A prescription for sustaining engagement

There are actions that organizations can take to ensure employees stay engaged and connected, particularly in the current environment:

1. Get leaders out front to talk with employees about the business environment and how the organization is responding, as well as the long-term vision and what the organization stands for.
2. Involve employees in efforts to manage costs to help them feel like active contributors.
3. Communicate consistently and candidly about both short- and long-term objectives.
4. Listen and gather input from employees.
5. Promote development opportunities so people can see a future for themselves worth working toward.

Less interest in leaving

Not surprisingly, the data also confirm that fewer people are looking to change jobs right now. Seventy-one percent agree they’re not seriously considering leaving their current job, up from 64% in the last quarter of 2007.

However, this also means that 29% of employees are still open to moving elsewhere. If engagement doesn't improve before the upturn begins and the job market opens up again, these individuals could be the first ones out the door. This could be a serious risk to rapid financial recovery and growth — especially if future attrition includes top talent in critical strategic roles. Smart employers will recognize the need to guard against this by keeping focused on effective workplace practices and programs that promote engagement and retention.