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False Comfort? How should Employers and Consultants Respond

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drawing of factors that impact employee engagementOur guest blogger is Andrew Thoseby of 1st Executive Pty Ltd  in Melbourne, Australia. 1st Executive is a boutique executive search, executive recruitment, interim executive and advisory firm providing custom designed people solutions for clients across a broad spectrum of industries on a local, regional, national and international basis. The firm’s recruiting activities are focused on executive, professional, technical and managerial placement for its clients. 1st Executive includes a growing interim management service in its business mix and has successfully placed interim CEOs, CFOs, sales and operational executives. Andrew is currently a member of the NPAworldwide Board of Directors.

There is no doubt that recruitment and search job orders across the western world have hit a flat spot. Most people that we speak to in the NPAworldwide network are reporting shorter pipelines, lower volumes of activity and a much greater focus on completing all of the assignments they are offered, even the contingent ones, in order to maintain revenues.

All this is going on while the continuing demographic certainty of a talent shortage in Western economies with ageing populations still makes good talent hard to find.

We can’t recall a time in our industry when a talent shortage combined with a significant slowdown in job orders. Typically, job orders are slowing as unemployment is rising; however employment figures, with some minor variations, are generally quite static and typically below the 20th century economic assertion that 5% unemployment represented full employment.

Other Factors at Play

In addition to job orders flatlining, recruitment and search professionals are saying that they are having to “work harder” to complete a placement. What this really means is that despite the talent shortage, employers are still expecting robust shortlists and are then often taking as much as double the time to make hiring decisions as they did in the two years immediately following the pandemic.

Sometimes they get away with this, but often in a competitive talent world, the good candidate will have been offered a position by a more agile employer and will have taken another offer by the time the client decides on a second or even third interview. The realisation that purple unicorns are mythical is having a slow dawn.

Hiding From Reality?

We recently saw a report by Reward Gateway/Edenred titled “The Engagement Paradox Report.” It’s Australian data, but we suspect there are similar trends in all western markets.

The subtitle is “Why Australian Employee Retention is Up but Happiness is Down.” This is both a subtitle and an explanation of the paradox. The data is worth commenting on. The report explores the context of retention being up while employee engagement levels have decreased. Arguably, increased retention is simply a factor of the job market and a reluctance during cost-of-living increases to take risks with new employment.

  • 45% of employees are not looking to change roles within the next two years but nearly 75% say that they will move jobs when the economic climate improves.
    There is nothing new in this relationship, we have seen the same splits for over 15 years with many line managers and human resources professionals unable to establish cultures that engage rather than merely retain. Staying is not the same as engaging.
  • 74% of businesses say that it is difficult to meet staff expectations for salary growth
    While salary growth is a higher priority for employees during cost-of-living increases, businesses with staff that are engaged understand that culture and purpose override salary expectations
  • One third of full-time employees have a low level of happiness
    The commentary on this report identifies that people see job security as more important than being happy at work. The happiest employees report that recognition reward programs and flexible work make a significant contribution.

The hidden metric in this statistic is that, certainly in Australia, there is an enduring per capita recession. Overall, the economy is growing very modestly but GDP per capita has been declining for six or more quarters. Somewhere in this, employers need to find a balance between creating engagement and improving productivity.

  • 27% of employees say they are less engaged at work than a year ago while 39% reported no change.
    If two thirds of the workforce say that, at best, there has been no change in their engagement, then it’s clear that many organisations have lost focus on how to build an engaging culture.
  • 87% of businesses agree that poor engagement impacts employee performance
    This seems like an obvious statement, and it makes the inaction on engagement initiatives even more pronounced. What more incentive do businesses need?

In a 100-person strong professional workforce earning average of $80,000 per annum each, and assuming that they are creating or protecting economic value at least three times higher than salaries, then a 2% improvement in productivity is worth $480,000 a year. Spending on initiatives supporting the engagement required to drive this level of productivity would be a fraction of this. Why isn’t this money being invested?

  • 52% of business leaders believe that decreased employee engagement across the business costs between $20,000 and $100,000 per month.
    While this is arguably the most rubbery number in the report as it will vary enormously according to the size of the organisation, all it does is support the higher engagement equals higher productivity equation.

There are many more detailed insights in this report, however, we would argue that the Engagement Paradox is not new, it is just more in focus. What is clear is that the risks in the near term are much more significant. Businesses that do not generate high levels of employee engagement will inevitably experience lower productivity and when the employment market improves many of these employees will move on. Recruiters and executive search consultants will have a field day.

They will be moving on in a continued talent shortage, these businesses will struggle to attract more top talent due to availability and also partly because it is inevitable that details and anecdotes of poor culture seep out into the employee community. Arguably the biggest challenge of a hybrid working environment is to create a culture of connection yet that is probably the single most important strategic opportunity facing human resources professionals and executive line management.

It is incumbent on hiring managers, executive search consultants and recruiters to work together to establish the foundations of high employee engagement at the beginning of an employee journey. Being decisive about the people that they want and then collaborating on a different level of onboarding processes is just the start.

The post False Comfort? How should Employers and Consultants Respond appeared first on NPAworldwide.


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