Employees have been through a lot these past few years.
Most recently, in addition to the regular pressures of everyday work life, today’s employees are coping with several difficult external circumstances (recession, inflation, supply chain issues, global uncertainty). For many, today’s uncertain times are contributing to increasing levels of stress – which can have far reaching implications for your company. In particular, with the Great Recession of 2008 still fresh in the memories of many employees, fears of layoffs, financial hardship, and general economic uncertainty could soon be impacting employee mental health and wellbeing.
The good news is that by following some key guidelines you can help your organization successfully navigate this unpredictable era.
Uncertainty, Stress and Productivity
Cutbacks and the fear of a recession cause employees to feel insecure about their jobs, causing stress. Feeling stressed is a factor in lower productivity.
Let your employees know where they stand. By recognizing their contributions regularly, you’re telling them they are seen, they are appreciated, and they are safe. Now is the time to ramp up recognition.
Even in more stable times, employee stress is a major contributor to reduced productivity, increased absenteeism, presenteeism, as well as high turnover. In fact, nearly 1 in 5 American workers have quit a job because of stress related issues.
Stress is also associated with higher accident rates, higher injury rates, and more days taken off for doctor visits.
And regardless of how your company is affected by worsening macroeconomic conditions, studies have shown a “clear negative effect of general unemployment on subjective wellbeing among the employed”. One study focused on the recession of 2008 showed that 55 percent of employees felt that their workplace had become more stressful during that time. A large part of this has to do with a perception of insecurity which is fueled by increased unemployment – even if that increase is occurring outside one’s own company.
In other words, being exposed to the negative effects of a recession makes everyone uneasy – not just about unemployment, but also about the potential for unfair treatment.
Interestingly – employee productivity can increase during a downturn. During the Great Recession of 2008, some studies actually showed an increase in worker productivity resulting from increased effort – in part because “When the alternatives are poorer, say because job search is less likely to result in success, it is optimal for a worker to respond with increased effort.”
On the surface, this might sound like a benefit to employers. However, with that increased effort comes the increased potential for burnout – another major concern when it comes to the impact of stress on employees.
“When an employee’s work is recognized, the likelihood that he/she will experience stress is lowered by 22.1%, whereas if his/her work is not, it rises by 16.7%. - BioMed Research International
By recognizing employee contributions and acknowledging the impact of their efforts, employers are able to directly – and dramatically – reduce the negative effects of stress on employees. Recognition can provide certainty and reassurance for employees who are feeling uneasy due to the volatility of the times. This reduction in stress can translate in turn to lowered turnover, absenteeism and more productivity.
Uncertain times demand transparency, open communication and a crystal clear focus on core values.
Whether you have had to make cutbacks or slow your growth, organizations need to do everything in their power to ensure that they maintain a reputation as an employer worth working for - because eventually, they'll be hiring again. For example, at the outset of the pandemic, there were several high-profile stories about leaders callously letting hundreds of employees go without warning, context, or clarity. This lack of transparency (and humanity) can permanently damage a company’s reputation, hobbling future efforts to grow and expand, and potentially causing irreparable harm to consumer (or investor) confidence.
The unfortunate reality that many companies have to face during an economic downturn is that growth will slow – and in many cases there could be cutbacks. Regardless of your situation, maintaining clear, thoughtful and open communication is absolutely essential and will have a lasting impact.
Critically, even when companies are forced to downsize, employees that remain have been shown to benefit immensely from that clarity of communication. One study noted that “employees who felt that the downsizing process was fair, and that communication was open and honest, reported fewer medical symptoms, lower survivor syndrome, and more job security than their counterparts [at other similarly affected companies].
An extremely powerful part of maintaining clarity of communication during times of economic upheaval is demonstrating commitment to core values. In showing that the organization is “walking the walk” with respect to core values, companies can provide employees with a tangible sense of stability, as well as a shared sense of purpose to help guide them through troubling times. To learn more about the importance of core values, check out our webinar on how to How to Drive Employee Performance Through Core Values.
When the future is unclear, it’s more important than ever to understand how your employees are feeling, and to be able to gauge the strengths and weaknesses of your workplace culture.
In this article, we’ve looked at a set of tools that companies can use to help mitigate some of the impact of economic uncertainty: reducing stress through recognition, living and demonstrating one’s core values, and maintaining open and caring communication between leadership and employees.
In and of themselves, these methods are absolutely essential – but without a way to measure the well-being and strength of a culture, leaders can only guess as to whether their efforts are succeeding.
Tools like Kudos, who’s proprietary, recognition-first approach to employee engagement provides clients with a clear view into the health of their culture, the performance of their employees, and allows them to gauge how connected employees are to the core values of the organization.
Though nobody wants to experience the negative side of an economic slump, by following the basic guidelines laid out in this article, companies have the opportunity to prove their character, and in doing so build loyalty and trust with their employees, their customers, and their stakeholders.
Kudos can help you build and maintain your culture, and keep your employees focused during what many experts believe is an imminent recession. Get in touch today to learn how.
Kudos is an employee engagement, culture, and analytics platform, that harnesses the power of peer-to-peer recognition, values reinforcement, and open communication to help organizations boost employee engagement, reduce turnover, improve culture, and drive productivity and performance. Kudos uses unique proprietary methodologies to deliver essential people analytics on culture, performance, equity, and inclusion, providing organizations with deep insights and a clear understanding of their workforce.Talk to Sales