Editorial
Following a global pandemic, climate disasters, global mental health crises, and geopolitical tension, today’s employees are reassessing the primacy of work in their lives and are less willing to “check their problems at the door.”
Some question the very notion of spending a third or more of their lives working, especially with life expectancy and retirement ages increasing in many countries. This discussion has been ongoing for some time, but the trend has accelerated. Unfortunately, employers’ struggles to adapt to the changing attitudes and needs of employees has led to a significant trust deficit in the employer-employee equation and a corresponding deterioration in the employee experience, necessitating a reevaluation of the social contract between both parties.
Why the Contract Matters
Economists predict that the U.S. economy might pull off a soft landing in 2024 given slowing inflation, optimism about interest rate cuts, and solid hiring and spending. Moreover, the Great Resignation is behind us, with quits rate dropping to their lowest since February 2021. So why bother with a new way of doing things? Despite the positive news, the following trends paint a different picture:
Disengagement: Although fewer employees are resigning, trust and engagement are at all-time lows — only 31% of employees report being engaged and energized by their work. What’s worse than employees leaving? Disengaged employees staying put.
Declining health outcomes: Mental health challenges and the loneliness epidemic continue to plague our society. Moreover, physical health in the US is worsening with obesity and diabetes rates skyrocketing, and insurers point to unhealthy habits like sedentary behavior as the cause for increasing healthcare costs. Sitting is the new smoking, and yet, half of desk workers say they rarely or never take breaks during the workday. Poor health outcomes are damaging for both individuals and businesses given the direct impact employee health has on productivity and the bottom line.
Union activity: Another indicator of change is the rise in union activity especially in sectors that are atypical grounds for unionization. Wells Fargo recently became the first US megabank to have a unionized workforce. As workers across domains realize the power of collective bargaining, employers are discovering that no industry is immune to unionization.
The path forward? There is no question that employers must continue to invest in fundamentals such as growth and development, DEIB and total rewards to deliver a world-class employee experience. However, to address new-to-world challenges created by the rapidly changing employer-employee social contract, employers must take the following critical steps to meet employees where they are:
1. Double down on purpose as a source of inspiration, compassion and profit.
In 2024, Gen Z is set to outnumber Boomers in the workplace. This generation, more than any other, is driven by a sense of purpose; they want to do work that matters. Inspiring purpose is a difficult undertaking, but research has demonstrated the link between purpose and the bottom line. As Daniel Goleman claims, purpose and profit are not at odds. While being purpose-driven matters at the enterprise level, employees must also clearly understand how their work ties to the organization’s mission. Don’t mistake this for an annual goal-setting exercise or writing a vision and mission statement; it’s a deliberate approach to help people find meaning in their work. When President Kennedy visited the NASA space center in 1962, he noticed a janitor, and introduced himself: “Hi, I’m Jack Kennedy. What are you doing?”
“I’m helping to put a man on the moon,” the janitor responded. That’s the power of a purpose-driven culture.
2. Focus more on how work gets done, less on where.
In a never-ending battle of remote vs. RTO, employers continue to focus on where work gets done. This narrow objective leads to tactics like free lunches, happy hours and ping pong tables to lure employees back. However, Gallup’s research indicates that how employees are managed has four times as much influence on engagement and well-being as their work location. Values (lived, not just written ones) will gain higher importance given the vast number of workers who seek alignment between their personal values and their employer’s values. In fact, nearly two in five Gen Z employees say they rejected a role that didn’t align with their values. Employers must, therefore, zoom out and focus on this “how” – how employees work, collaborate, solve problems, innovate and live the organization’s values every day.
Concentrating efforts on the “how” of work design will allow employers to find more effective ways to foster collaboration and drive business outcomes rather than applying rigid mandates that decimate autonomy, reduce flexibility, erode trust and restrict access to top talent.
3. Focus more on the what, less on the when.
In a year-end memo, Wayfair CEO, Niraj Shah, asked employees to work harder. “Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success,” he proclaimed.
Most employees are willing to put in longer hours to meet a critical deadline, but when the objective itself is to work long hours, leaders like Shah start to lose employees. When did we start believing that being productive means being always on? Ariana Huffington argues this mindset dates back to the first Industrial Revolution when machines were revered, and minimizing machine downtime was the goal.
For humans, however, sufficient downtime is vital. The Energy Project confirmed this learning in their work with athletes for whom rest and recovery is paramount in optimizing performance. Businesses that strive for results instead of hours worked build more meritocratic cultures with diverse teams, higher engagement and trust, and ultimately compete better in the marketplace. Organizations must shift their focus to outcomes driven (what) and values exhibited (how), not hours (when) and location (where).
4. Design human-centric organizations.
There is no substitute for decency, respect and empathy, and employers that understand this will win the war for talent in 2024 and the future. Offering competitive total rewards packages is part of getting the basics right, and while compensation matters, culture and leadership are stronger predictors of employee satisfaction, engagement and attrition. Whether it’s RTO or another hot topic, co-creating policies and systems with employees drives better business outcomes compared to top-down mandates. Research shows that engaging employees in decision-making can improve engagement and even lead to fewer labor disputes. Just as VOC (voice of the customer) is critical in product design and meeting customers’ needs, gathering VOE (voice of the employee) is non-negotiable in designing workplaces in which employees are the consumer.
Related Article: Managers Are Not Okay. Here’s How You Can Help
5. Serve as guardians of employee well-being.
We are experiencing a global mental health crisis and collective grief from the pandemic: the loss of life, loss of time with loved ones, loss of important moments and loss of connection. As a result this complex, post-pandemic world, the baseload of anxiety employees bring into the workplace has drastically increased. Against this backdrop, CEOs instituting draconian RTO mandates, advocating for DEI to die and asking employees to leave pity city can seem out of touch and callous. Healthy employees are productive employees. Not only should employers reflect on their contributions to the alarming state of physical and mental health, but they must also invest in improving employee well-being. It’s the right thing to do, and it reduces healthcare costs and improves productivity.
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Key Terms of the New Contract
In the new world of work, employers must treat people like humans first, employees second. Bain refers to this as re-humanizing work. Whole person management is non-negotiable, and business success and employee well-being are not at odds. Excellent employee experience drives outstanding customer experience. The best leaders understand this, and the organizations that embrace the new contract will find themselves in a uniquely differentiated position.
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