Getting your employees back on side after a gruelling 2009 will be an uphill task. And revamping a weary workforce isn’t just about the money – sometimes a pat on the back yields better results. Sarah O’Carroll reports
There was one good thing about 2009 for the
HR fraternity – the pressure eased on the
recruitment front. The skills shortage was no
longer at the forefront of HR’s mind as hiring
freezes and slashed budgets took over. Scarcity
of jobs meant that employers were back in control and no
longer at the beck and call of demanding candidates.
Looking back, during 2009 there was lots of talk and
advice given to organisations about the importance of
using the slow time wisely to train and nurture their peo
ple within the organisation in order to emerge from the
downturn stronger than before. We heard it everywhere,
we read it everywhere. One example of the myriad reports
was PWC’s Managing tomorrow’s people: how the down
turn will change the future of work which stated that busi
nesses that continued to focus on investment and employee
engagement, while staving off the global financial crisis,
would emerge as clear leaders. Likewise, businesses that
continued to offer their employees new opportunities and
invested in their people pipeline would be at a competitive
The message was clear – focusing on retention and moti
vating key talent would be critical for positioning organ
isations to capitalise on the inevitable upturn in the
economy. As Professor Roger Collins of the University of
NSW said in February 2009: “Think of the next 12 months
as a workout in the gym to become stronger and ready
for the turnaround.”
Let’s sound the alarm bells
And here it is – the turnaround has come. Australia’s econ
omy has entered 2010 in a healthier state than most devel
oped markets. NAB employment index and ANZ and Seek
job ads series tell us job ads are on the up. Employer con
fidence has surged. While Australia’s economy was lucky
and didn’t technically enter into recession, companies will
still feel the effects of the rebound. While it will be a wel
come reprieve from downsizing and cost-cutting, what
does this mean for HR?
Well, it means people are about to leave – and leave in
droves. Some have scoffed at the latest descriptions of a
looming “mass exodus” saying there aren’t enough jobs
out there for people to go to. But the collective surveys of
employee sentiment are nonetheless pointing to something
– widespread discontent and dissatisfaction.
In the US for example, only 45 per cent of Americans
are satisfied with their jobs, down from 61 per cent in
1987 when the survey was first conducted by The Con
ference Board. Here in Australia, according to a study by
Chandler Macleod, an astonishing 95 per cent of employ
ees are looking for work, of which 73 per cent are actively
looking and 22 per cent are passive or open to offers.
But surely if the clear messages and advice given to
employers in 2009 were taken up, then companies should
be alright and not have to worry about losing their best and
most trusted in mass?
Unfortunately not. Despite the reports and the contin
ued emphasis on using non-financial incentives to moti
vate when cash is tight, companies didn’t do it, says
Matthew Guthridge, associate principal with McKinsey
& Company in the UK. He says that during the global
financial crisis, most companies who could no longer afford
financial incentives did nothing to help motivate employ
ees in alternative ways.
“It’s sort of counter-intuitive – our initial thought was
that if you can’t afford to give pay rises or bonuses any more
you would actually increase the frequency of all these other
things (non-financial rewards) and that these behaviours
would continue into after recession,” he says. “But what
seems to be the case is that most companies seem to be wait
ing for a return to profitability again so they can start pay
ing the bonuses again – so they have learnt nothing.”
Why does everybody want to leave?
Each organisation will have to assess the pulse within their
organisation to see if they face a potential high staff
turnover in the early part of this year. But, as the indica
tors show, a lot of people do want to leave and no doubt
the boards will turn to HR and ask why.
A senior consultant from one of the leading management
consulting firms in Sydney which lost six of its senior con
sultants in the last two months said that the way to keep the
best people is to make them feel appreciated and valued.
“It’s not about pay – that would not make me stay,” says the consultant, who asked
not to be identified. “I have to know that the work I am doing is being recognised and
is of value to the company. This didn’t happen last year. The partners think people are
leaving because of the pay freeze and drop in bonus – but that’s not the reason.”
Within the firm turnover was quite low throughout 2009, but in the two months since
the economy has picked up, people are gaining confidence and deciding to leave.
“Six of our senior consultants left to go to other consulting firms between December
and January,” said the consultant. “It’s one of the greatest insults to a management con
sulting firm to lose your best people to the competitors. And not only that, but there’s
always the danger that they will take their clients with them.”
According to the consultant, the danger that departing employees will take their clients
with them is serious.
“One consultant we lost has looked after a client for years and built up a great relationship
with them,” she said. “The client is a pharmaceutical company and I think that when this
consultant leaves there’s a good chance that client could go with them. She knows their busi
ness inside out.”
The consultant, who said she flagged the issues of a
drop in morale with the partners some time ago because
people felt they were not being valued because overall
profits were down said the partners didn’t seem interested
“It’s only now, when they see people walking out the
door, are they sitting up and asking why.”
A pat on the back is all it takes
Is it too late to salvage the down-trodden distrustful work
force of 2009? Guthridge believes it’s not, but he empha
sises the importance of not relying on financial incentives.
Receiving praise from an immediate manager is one of
the best retention tools and is often a more effective moti
vator than financial incentives, says Guthridge.
Based on a survey carried out by McKinsey on how to
motivate employees, Guthridge said that non-financial
incentives are more effective than financial ones and should
be used as a retention tool.
The report found that the top three motivators were;
praise from the boss, attention from leaders in the form of
one-on-one meetings and also the opportunity to lead a
However throughout the GFC, research shows that
instead of using more non-financial incentives, companies
actually used less.
And those employers who rested on their laurels and
took their foot off the retention pedal might need to start
employing some new tactics quickly to avoid losing their
Some quick-fix solutions are possible, according to
“Hand-pick your top talent and get them to work on
two or three of your most critical projects,” he says. “This
could bring about a quick turnaround in performance and
morale with this critical group,” he says.
“It can be anything from a complete restructure to cost-
reduction types of initiatives that are going to deliver results
to the bottom line – if you can put your best people on to
these kind of projects, the talent find it incredibly moti
vating because firstly they get a lot more exposure to sen
ior management and secondly they get a ringside seat on
all the strategic issues. It’s incredibly motivating and
However not everybody in the organisation can sit up
with the top people in the organisation. So how can you
motivate people at lower levels in the organisation.
Guthridge says that non-financial incentives can also
be used to win these people back. Firstly feeling secure in
their job is one thing, and secondly – reflecting what hap
pens at higher levels in the organisation – each person
should be given individual responsibility for certain tasks
and projects – no matter how big or small. The reason for
this he says is because it can often be more stressful if
you’re not in control of a situation.
“Giving people more responsibility can
affect immediate results,” he says.
Guthridge said that it’s one of those no-
brainers that companies should invest in
this type of effort. It fixes many problems
because people are given more responsibil
ity, feel valued and staff like it. It also helps
to develop your team.
“It has a double-whammy effect,” said
Guthridge. “When you talk to executives
they often say where they learn the most is
through special projects. So it is a learning
and development model as well as a moti
vational tool,” he says.
Some of the most commonly used moti
vational tools are actually the worst the
study found and have the least impact in
terms of retaining people.
“Less than 30 per cent of people think
the town hall meetings where the CEO
stands up in front of the whole company
is motivating,” he says. “Also, as men
tioned, the opportunity to lead a project is
a greater motivator than training. How
ever, despite this, companies tend to spend
a lot more money on training, which is not
a huge motivator and, according to the
research, is not very developmental.”
But the companies who will be entering
2010 in the best position will be those who
didn’t take their eye off the importance of
retention throughout the downturn.
“There was a critical period during the
crisis when the people who were leaving were
the best people because they knew they could
get a job anyway and the people you lose are
very often the people you want to keep. What
happens then during the recovery period is
very rapid growth, very sharp improvement
in some companies coming out of the reces
sion and you see a mass departure at all lev
els, it’s a mixed bag,” says Guthridge.
Overall, the employee value proposition
is very important when it comes to retention
in 2010, says Guthridge, and again money
is not the answer.
“If you are a company who simply pays cash, as soon
as someone pays more cash you’re going to lose them.
However if you’re a company who, as part of your EVP,
offers other non-financial motivators including career
opportunities etc, your EVP is more difficult to replicate,
so your stickiness is much stronger.”
What happens on a great workday?
Although the McKinsey report states that the number one
motivator for employees is recognition, a study by the
Harvard Business School, reported in the Harvard Business
Review, disagrees. It says that the key to motivating and
retaining your people in 2010 is through “progress”.
The study invited more than 600 managers from a range
of companies to rank the impact on employee motivation
of five workplace factors including: recognition, incen
tives, interpersonal support, support for making progress,
and clear goals. But what the managers ranked as impor
tant differed to a previous multiyear study by Harvard
which found that on a typical “great workday” 76 per
cent of people’s best days were when they made progress
The advice the authors of the report, Teresa M. Ama
bile and Steven J. Kramer, offer from this study is: “Scrupu
lously avoid impeding progress by changing goals
autocratically, being indecisive, or holding up resources.”
One of the ways they advise doing this is through cul
tivating a culture of helpfulness. This can be done in a
more direct way: “Roll up your sleeves and pitch in. Of
course, all these efforts will not only keep people working
with gusto but also get the job done faster.”
But the report doesn’t completely dismiss recognition as
an important retention tool:
“As for recognition, the diaries revealed that it does
indeed motivate workers and lift their moods. So man
agers should celebrate progress, even the incremental sort.
But there will be nothing to recognise if people aren’t gen
uinely moving forward – and, as a practical matter, recog
nition can’t happen every day. You can, however, see that
progress happens every day.”