Are the actions of the few, rising regression for the many?
- 8 Min Read
“You come here to work, you get paid, end of story. If you don’t like it, leave”
“You come here to work, you get paid, end of story. If you don’t like it, leave.” For anyone over a certain age, we probably all had an employer or a boss that said words to this effect. For centuries our work was just this transactional. You turned up, you got paid – end of story. But the hard work of the social and labor reformers during the industrial revolution started a journey that would see employers reconsider the role of their people and how we treat them at work. It led to sweeping protections for employees, and a widespread recognition that treating people well at work was a far more successful route to profit and better business.
As I wrote in my latest book earlier this year, I found that those organizations with high levels of employee care and well-being outperformed the stock market by around two to three percent per year, over a 25-year period. Those UK FTSE 100 companies that demonstrate best practices in employee care and well-being show a higher-than-average shareholder return. The evidence is very compelling.
But as we look towards 2023 there is a worrying new trend from some large global employers that is risking a regression to the old ways, where we normalized force over choice. The recent decisions, statements and actions of some well-known tech CEOs harks back to an era of corporate governance and leadership that has long fallen out of favor with employees.
We simply cannot let ourselves lapse in this way – at the very least because it’s expensive!
The old ways are costing us money
There is an interesting debate online that follows a similar path as the quote at the start of this article. That a CEO can do whatever they like, that their responsibility is to their shareholders and investors more than it is their employees – which is only partly true. While they are free to make any decision they see fit (like mass redundancies via email and preventing employees forming or joining a union), they aren’t free from the consequences of those actions.
Let’s look at Amazon as an example. Seventy-six percent of people believe Amazon workers should be able to join a trade union if they choose, without interference from the company. In fact, polls suggest that American public approval for trade unions is the highest it’s been in 20 years. Despite this, the Economic Policy Institute report that “Amazon have used a wide range of legal and illegal tactics to prevent workers from unionizing”.
Consumer attitudes towards Amazon waning as a result. Eight out of 10 of people think Amazon needs to ‘listen to worker concerns about safety and workloads’. It’s clear from the Reddit threads and the sheer number of whistle-blowers that for many of us, Amazon isn’t a company we want to work for – or stay with.
According to Engadget, Amazon’s attrition is now costing them $8 billion annually – and its getting worse. For scale, Amazon’s net profit in 2021 was $33 billion, so they are looking at around 25% of their profits in attrition costs. Bloomberg are calling this current trend of quitting working at Amazon an “Amazexodus”. I think Jeff Bezos’ early mission to put the customer at the centre of its operations was what made the company so successful (and why I used it so much). But its focus on the employee too is what will now keep it success in the future.
The employee is important – and almost everyone agrees
For those who still believe in ‘force over choice’, there is growing evidence form the unlikeliest places that we must treat our people better. According to Edelman, employees are now considered to have an unprecedented material impact on a business. Globally, the employee is now believed to be more influential on organizational success than customers and shareholders.
In 2021, 94% of 600 US investors say they want to know details of how an organization supports employee wellbeing before they will invest. A massive 74% of investors now say a company’s ability to win the best talent is more important than gaining an investors trust that they have the ability to attract new customers.
Consumers too say how a brand treats its people is very important. Almost three-quarters of consumers say they must be able to trust a brand to what is right by their people. Six in ten consumers want to shop with a brand that treats its staff well. Earlier this year Benefex reported that globally, the number one priority when choosing a new employer was well-being. The best and brightest don’t want to work for a company than doesn’t consider them with care.
For many leaders, the old ways of control, structure and there being little need for trust are the ones they are most familiar with. Starting to view our decision-making through the eyes of the employee, pay more attention to being empathetic and considered can be hard work. But we cannot ignore the compelling and vast evidence base that the new ways of treating people at work are driving more success. If the pandemic taught us anything it’s that when trusted and looked after, our people will get us through the toughest of times.
We cannot let the lessons of the last three years go to waste
An employer’s commitment to attracting and retaining the best people by caring for them more isn’t a new concept – well-being has always been a part of an attractive employer. By the time the US was leaving The Great Depression, hiring was ramping up. With so many workers still overseas, it became a very competitive job market, so wages began to climb and the fight for talent raged. Sounds familiar, doesn’t it? While this all happened in the US in the 1940s, as I write this article today in the UK, there are still two jobs available for every job seeker, so employers are working harder than ever to attract the most talented people.
Back in the 1940s, to protect the economy, the National War Labor Board stopped employers from competitively raising wages by introducing a wage cap. But health insurance was exempt from this cap and the IRS decided that employer contributions to health insurance premiums were tax-free. So to attract the best and brightest, employers began to offer health insurance on top of wages. In 1939 just 8 million Americans had health insurance, but by 1952, 92 million did. I think this was the start of a 70-year relationship our well-being has had with the workplace. The pandemic influenced employment just the same as the Great Depression did; by forcing employers to offer more over and above pay to support the lives of their people and attract the best people. But also showing more care and compassion towards those that we employ.
For those that let themselves slip back into the old ways, it will only be a matter of time before they have to turn that ship back around and focus on the well-being and engagement of their people. Employees have good memories and little patience nowadays. The tactics of large social media companies have made headlines recently, so it might not surprise you to learn that alongside makers of firearms, gambling providers, oil and gas companies, pornography studios and tobacco manufacturers, social media is among the top list of employers people say they don’t want to work for. The decisions these large employers make will be on show for all to see and analyze, and they will impact an organization’s ability to attract and retain the best people. Every time you force a reduction or make an unpopular decision, you risk damaging your employer brand.
In an article for Talent Canada, Todd Humber says it better than I could, “Your most talented employees are also the ones with the most options”. When our best people see others being held back, unfairly treated, pushed around and not cared for, it sends a strong signal to them that this is a business that would do the same to them when it needs to.
If we don’t care for them, they will leave, and others will follow
The number of people wanting to leave (and leaving) their employer has never been higher. It’s created one of the most challenging hiring conditions many have ever seen. At the time of writing, half of employees say they would quit if they were forced back into the office full-time. A further 50% say they’ve quit a job in 2021 because they felt disrespected at work. In 2022 Donald Sull et al published a report in the MIT Sloan Management Review that found a toxic corporate culture was the number one reason why employees quit their jobs in 2021.
Workers have been taking decisions to leave based on how their employer treated them during the pandemic, and they will be doing the same again, once a recession and the cost-of-living crisis ends. Although an impending economic downturn may stop higher numbers of quitters in 2023, the evidence from previous recessions and crises’ shows that this will pick up again and when it does, we’ll all realise that employees have long memories and deteriorated employer brands can take years to recover.
Gethin Nadin is an award-winning psychologist and two times bestselling HR author.