A friend of mine just got off the phone with the head of HR from a national company. The HR executive noted that his company’s growth prospects were being limited by the lack of executive talent due to a depleted bench. He felt that “outside” talent was needed to expand their footprint and to bring in new ideas; and that they would support my friend as he learned the business. Of course, a huge compensation package was promised. The news brought a smile to my face. Not because my friend pursued the opportunity – he is smarter than that. My joy came from knowing that this company is finally facing the consequences for their rotten culture and the way that they have behaved since the start of the great recession.
This company (name withheld to protect the guilty) has been treating employees as indentured servants rather than a valued asset to be nurtured. Why? Because they could. A slowing economy and high unemployment rates led the chief executive to adopt a set of beliefs:
- Employees can easily be replaced
- Low wages can be paid since it’s a “buyers” market
- No investment in training is necessary
For many years it worked, kinda. The executive believed that he had to make tough decisions to ensure survival of the company: he laid people off, pushed hard on productivity, cut expenses, and instilled a culture of fear – non-compliance would not be tolerated. Of course, he was handsomely rewarded for this behavior. Stocks are at record levels and his personal compensation has more than recovered.
But, have the employees shared in the recovery? – not so much. Little or no merit increases, non-existent yearend bonuses, overworked and disengaged sums up their situation. These employees have kept their head down and done what was required to keep their job, but not much more.
Sound familiar? Unfortunately, this chief executive and company are not alone. The last six years have fostered a great mistrust and terrible lack of loyalty on both sides of the employment agreement.
The day of reckoning is near
Thankfully, the employment landscape is starting to change. The improving economy and aging workforce are leading to the retirement of many employees that need to be replaced. The Society for Human Resource Management reports that by next year one-third of the U.S. labor force will be over 50 years old, up from 27 percent in 2007. Michelin North America, the tire manufacturing company, told NPR that more than 40 percent of its workforce is approaching retirement age.
Another factor is how companies are addressing the skills gap. With 54 percent of employers saying they have trouble finding qualified candidates for job openings, many organizations are beginning to take a more active role in developing and training employees. Nearly half (49 percent) of employers plan to train workers who don’t have experience in their industry and hire them, up ten percentage points over the prior year. The reason? On average, a company loses more than $14,000 for every job that stays vacant for three months or longer and one in six companies loses $25,000 or more.
Companies like Cisco, Randstad, Bosch, and MasTec are all leading the way in accelerating talent development to ensure the right expertise, in the right place, at the right time is available to serve the customer.
With companies hiring and investing in employees again, many capable, but disengaged employees are quitting at a faster rate (“employees quit their manager and stay for culture”). All leading to more phone calls like the one my friend received.
Why is this a good thing?
The basic employment agreement is based on the concept of fair pay for a fair days work. What many companies have forgotten is that there is so much more than this basic transactional relationship. Even though individuals that have experienced a layoff are less likely to trust companies again, building a great corporate culture based on trust never really goes out of style.
James Laurence, a sociologist and research fellow at the University of Manchester, explains that “There’s lots of good work showing that teams of employees who trust one another and the company they work for, who have higher morale, and greater job security, are more productive, creative and efficient.” In other words, it’s worth the effort for companies to cultivate trust with their employees.
Timeo Danaos et dona ferentes (“Beware of Greeks bearing gifts”)
Pursuing a new employment opportunity with a promise of a lot more money after years of struggle is tempting. If you do take the call, make sure that you do your homework and spend an equal amount of time assessing the company during the interview. The big compensation package and the lack of internal talent can be an indicator of trouble.
For those companies that have created a terrible culture, it’s never too late to change. Frankly, I hope that some of them struggle a bit longer just to make sure they see the error in their ways.
Now that the job market is opening up again and you may have a choice where you work, “beware of Greeks bearing gifts”, even when it’s wrapped up in a nice compensation package. You might be unpleasantly surprised once you open it.