Repairing the Breach: Understanding and Addressing Employer-Employee Relations

“Fortune always leaves a door open in adversity in order to bring relief to it.” - Don Quixote

Both employees and employers could do much to take heed of Cervantes’ hapless, yet unexpectedly shrewd knight. With positive news coming from both the recent jobs and unemployment reports, the US economy has shown a greater resilience even most economists must concede. And yet the unease of 2022’s employer-employee relationships looms over the good news, threatening to puncture the parachute of an economic soft landing.?

Unfortunately, for many companies, employer/employee relations: trust is mired in a trough. And in some respects, it’s not without warrant. 2022 brought us quiet quitting, side-lining, and goblin-mode—the latter which made Oxford’s word of the year. While we as authors argue that these issues—cleverly titled or not—have existed since the advent of employment, the seemingly flippant nature in which they’ve spread across the cultural milieu feels different. Add the push and pulls of the War on Talent, remote work, and an energy shortage, all against the backdrop of lingering effects from a post-pandemic—and nerves between both organizations and their people have often frayed over the past year.

Yet 2023’s economic outlook is littered with warning signs for both parties. Employers are looking at the possibility of a recession, only further reinforced by the Fed’s warning of future interest rate hikes. Employees are seeing some high-profile industries hedge against the downturn with lay-offs and/or hiring freezes (though downsizings are somewhat misleading given pre-pandemic levels). That said, mere media coverage can spur wary consumers to put wallets back in their pockets.

So whether you are the frustrated executive or employee, how can this impasse end? To find answers, one must delve into the past.?

To many employees decades of wage stagnation has created buried discontent, particularly those in manual labor industries. With the labor markets flipped post-pandemic, the reversal of fortunes empowered employees to address lagging wages with management or leave for more lucrative offers elsewhere. Understandably, many took this as long overdue and recognized the prime timing and pushed their advantage. Regardless of the merits of a wage increase, there’s little question that the rapid increase in wages had many companies racing to retain and attract new talent (and continuing to do so). But doing so has the potential of perpetuating a wage-price cycles fueling inflation and threatening the economy.?

Employers’ angles show a more recent restlessness. Covid-19’s strangle on the economy in the early spring-summer of 2020 left many organizations wondering how to keep their firms in the black (or at least manageable red). Furloughs and layoffs were used by some, yet many others refrained from downsizing (some with assistance from government programs). In what could have been a multi-year economic depression, the world breathed a collective sigh. Little did employers know that in a year the labor market would stand on its head with employees in unprecedented demand. As noted above, a labor market in favor of employees may have been appropriate, but the speed and severity after a generational event took numerous executives aback.?

Headlines about the pandemic swiftly shifted to the war on talent. Millions of employees switched to new companies (and even new industries), leaving employers with little recourse but join skirmish after skirmish for their top employees, while simultaneously scratching their heads about the efforts they made to retain their employees from Covid’s blight only a year before. Understandably not wanting to endanger current staff, few have openly commented on this circumstance, but there’s little question of a building frustration regarding the circumstances, particularly as it relates to hybrid work (another publication’s word of the year) and the potential of a recession. A sense of willingness to compromise regarding in-office appearances seemed reasonable to many executives, yet the pushback has been substantial from a number of employees who now see themselves empowered for the first time in numerous years—or potentially ever.??

So now what? The prior three years have produced unpredictable ebbs and flows, and 2023 is shaping to be no different. This time; however, inflation will stop governments from reaching towards more stimulus programs. To that end, employee and employer mistrust on both ends will only exacerbate the situation.?

Rapprochement is needed with concessions from both parties.

For companies whose cash flows support it, a compensation analysis demonstrates goodwill and understanding of potentially valid frustrations. Candor about the findings, and if needed a plan to address them, will help patch the foundations of salary discussions that had begun to erode. The same can be said of reviewing and/or developing a robust career path. Providing internal mobility for new positions solidifies employees’ sense of satisfaction—so much so some may even be willing to take a reduced salary for the chance. And lastly, balance what is the appropriate need for remote work. In one study, 20% of jobs posted were remote yet 52% of applicants applied, and work flexibility ranked 3rd for employee needs behind just compensation and work-life balance. Weighing too heavily on a return to work decree can have an impact on staff morale, and by extension productivity. That’s not to say that requiring time in the office shouldn’t be mandated at times but a deft touch has not only the potential to increase productivity by 10+%, but also reduce attrition by as much as 50%.

For their part employees need to take an honest look at their perception of and participation in their organization. 40% of global applicants identify a company culture as a dominant priority. While leaders may set the culture for an organization, employees bear responsibility for perpetuating a good one. Quiet quitting and other apathetic actions create a corrosive culture at the employee level since others must be picked up uncompleted work. That, in turn, results in those colleagues being overly taxed that affects their work-life balance, and accelerates departures. Coming into the office for in-person gatherings when asked without furtive grumbling, participating on camera with others in virtual meetings, and giving organizational leaders a reasonable amount of time to correct needed changes all go towards creating a collaborative culture for all involved.??

Proactivity also plays a crucial component for employees, particularly as companies continue to look at 2023 belt tightening. Rather than expecting employers to address salary and/or career progression alone, restless employees can take a marked approach towards providing tangible evidence of their value to their organizations. They can also harness their new empowerment to impact employee-relations and encourage appropriate change. These may include self-driven projects that could be scaled to new, or volunteering to learn a new skill set currently lacking at the organization. It could also be driving a richer organization culture. Organizing virtual workplace coffees for new remote employees to meet larger teams is one way. Mentoring new entrants to the workforce is another. In time, employees who embark on these initiatives are seen in a different light–both by peers and leaders. They can become foundations of the organization itself. Thus, when next the employee addresses the opportunity for promotion or compensation, the manager has a broader vantage (and more leverage) to push the request forward.?

In the end, stagnant employee-relations from either party will find its organization in quicksand where lack of collaboration will pull down profits and job opportunities at the best, but more likely sink long-term growth that leads to job losses. New tactics must be implemented from all parties if both shall come out on the other side of the labor market storm. Will employers and employees take each other’s hand to pull the other (and themselves) up, or will the shadow of unease and mistrust keep them grasping, pulling down economic outlooks along with it?