Historically, we find a pattern of employers utilizing managerial versus leadership techniques. Generally speaking, there are marked differences in the utilization of such techniques: 1) Management is more productivity driven 2) Management is generally focused on the bottom line-profit driven 3) Management is less concerned about employee empowerment, incentives, programs and benefits 4) Management is more resistant to change 5) Management is less likely to take risk in new ventures 6) Communication is usually top-down when employing managerial technique.
Given these generalizations, let’s focus our discussion on numbers 2, 3 and 5. During economic downturns, such as that we are now experiencing; employers do not have venture capital to take risk, nor can employers afford to decrease productivity. Tthey must focus on making profit with the least amount of cost. Therefore, employers expect more production out of their employees, reducing as much overhead as possible. What this means is that employers expect employees to do more with less. Simply stated, employees are expected to produce more with less pay, less benefits, less assistance from co-workers and management.
Now, the author provides a quick review of basic economics. The principle of supply and demand comes into play when discussing employers utilization of managerial or leadership techniques. Again, historically, we find evidence to support employer use of managerial techniques when faced with economic downturn. In addition, when there is an abundant supply of labor (high unemployment rates indicate an abundant labor supply), employers are able to pick and choose employees. What they receive during an abundant labor supply/economic downturn, is the very best employees for their money. High unemployment is believed to correspond to increased competition for available jobs. Thus, you have MBAs vying for positions with basic skill/general education requirements. This appears to be good for the employer, but bad for employees.
When employees are desperate to stay off the unemployment roll, they take jobs that are below their skill and education levels. They may feel their skills are underutilized. This may lead to lack of motivation and job satisfaction. When job satisfaction is decreased, productivity and loyalty also decrease. Added to this is the employer’s use of managerial technique which focuses more on productivity, while cutting costs. This means the employee is expected to work harder, often times doing the work of one and a half to two other people, with less benefits and pay. This adds to the employee’s lack of motivation and burn out. The eventual impact to the employer’s bottom line is high rates of turnover, which in the long run costs more than retaining employees and spending money to ensure employee satisfaction.
Conversely, when the labor supply is low, employers are forced to entice available employees to their company. There are more available jobs than there are people to fill them. Labor supply shortages are consistent with low unemployment rates, as we had experienced in the mid 2000’s. Competition for talent is at an all-time high during economic up-turns. This results in the employer’s desperation in filling positions. Thus, employers are willing to take a “warm-body” to fill a position. Therefore, the talent and skill level of employees is less. As a result, customer service or quality of products may suffer.
During times of economic up-turn, employers begin to employ leadership techniques. They attempt to entice employees by offering higher wages, more benefits, and incentive programs. During economic up-turns employers have the financial resources to take additional risks. Because employees are a valued commodity, due to labor shortages, employers begin focusing on employee retention and succession planning. Employers start to fund research and development, which includes empowering employees and soliciting new ideas for growth and expansion. We assume this results in the employee’s sense of value, worth and increases employee morale, job satisfaction and loyalty. However, we forget one key factor that is the common thread to both economic up-turn and down-turns.
Whether during economic up-turn or down-turns, employers must be aware of the impact staffing has on employee morale. Fluctuations in employee morale lead to increases or decreases in productivity. During up-turns, there is a lack of employees to fill the positions available. Thus, those employees who are working in the organization have less assistance to produce more. This also occurs in economic down-turns, when the employer purposefully cuts positions to increase profit. The result of both situations is employee burn-out, high rates of turn-over, resulting in high cost to the employer to advertise and train new employees. Thus, the burden of employee morale rests heavily on Human Resources maintaining balance between workload, and employee retention and hiring, while keeping pace with the employer’s finances in response to macro-economic factors.
Christie Husted PhD