Austerity and Employee Engagement

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Bleak. That’s been the outlook of late. Public sector strikes, higher living costs, a never ending retirement age and general economic apocalypse have been the big news stories for what feels like forever now. We are living through thrifty times, and what was made abundantly clear in George Osborne’s Autumn statement last week (apart from the fact the government will fail to cut the deficit in 5 years, as promised) was that the UK faces a long and painful road to recovery.

The question is, just how much of an impact will the austerity measures and hard hitting rhetoric outlined in the Autumn statement have on those UK employees lucky enough to stay in a job? The answer seems to be, significant. In the public sector pay rises have been capped at 1% until 2015, in the private sector banks are being warned to cut bonuses and build up reserves in light of the eurozone crises and elsewhere, almost 50% of SMEs are cancelling the most sacred of employee events – the Christmas party.

This raises a thorny issue. In times of economic peril, just how committed are companies to keeping existing employees engaged? By removing both financial and non-financial incentives, either through headcount reduction, curbed compensation or the cancelling of employee events, businesses may be saving the pennies but potentially risking falling engagement and in turn productivity.

We think it’s crucial to mitigate against the risks of low employee engagement during times of austerity. It doesn’t have to be flashy, but some recognition is crucial.

What do you think?

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