Employee Engagement Can't Thrive on Bonuses Alone
After years of a prolonged boom in the financial services industry, things came crashing down late last year when firm after firm were either acquired or went to the government for bailouts. According to new research from ORC Guideline, 350,000 jobs could disappear from financial services in 2009, not counting the 200,000 lost in 2008.
The report, "Employee Engagement In Times of Uncertainty," goes further, stating that job losses in financial services alone account for approximately 8 percent of overall unemployment. While this has obvious implications for those laid off, it arguably affects employees who have survived the layoffs even more. The onus is on firms to keep them firing on all cylinders in relation to their jobs. ORC Guideline's research finds many organizations aren't doing a good job in that aim thus for, as it found 21 percent of workers are engaged in their work, and 38 percent are "partially to fully disengaged" (specific percentages were not broken down for the financial services sector).
"The entire financial services industry was completely unprepared for this sudden change in the way it does business," explains Tricia Juhn, project director at ORC Guideline. "The segment had been expanding exponentially since the 1980s, and hasn't seen this kind of employee downturn in all that time."
The problem created by disengaged employees is that it affects how they perform their tasks. This goes from the customer-facing agents dealing with consumers to the fund managers and traders. "For fund managers, lack of employee engagement may not necessarily mean losing a customer, but rather $4 million in five minutes," says Aaron Horenstein, research analyst at ORC Guideline. "To have those employees disengaged or not fully engaged would have a tremendous impact on the industry."
The problem is that in the past, financial services firms kept workers happy by either promoting them or giving out lucrative bonuses. These bonuses, which have drawn much ire from the common populace as well as federal government, which is currently funding many large firms via TARP money, are not as abundant now. In the absence of these lucrative bonuses, Horenstein says the onus is on these firms to get back to basics and get creative with how they can get employees back fully on board without stuffing their pockets.
The first step, according to Juhn and Horenstein, is determining what does drive engagement in financial services. They highlighted three key drivers:
- senior leadership that creates stability, transparency, direction, and focus;
- good relationships with immediate supervisors, as 84 percent of financial services employees reported a positive relationship with immediate supervisors; and
- a firm that demonstrates pro-employee decisions, via career advancement, improving skill sets, and acquiring new knowledge.
According to Lisa Wojtkowiak, client relationship manager in the employee engagement practice for Opinion Research Corp., the foundation for all three of these drivers is communication. "This is going to be a huge issue, and we're going to see major competition going on between [financial services] organizations trying to get good people back," she says. "It's more than just employee engagement at that point, it's about managing the internal and external brand of the employer. It's a huge hurdle."
Wojtkowiak stresses that before a company can move forward on recruiting, it must make sure that the employees still with the organization are engaged. "These are the ones that have the intelligence, talent, experience, and have weathered the storm with them," she says.
In this aim, the report suggests companies looking to invest in employee engagement strategies look into employee satisfaction surveys and creative compensation programs. The report highlights an example of a latter, noting a professional services firm's offer to junior associates for a one-year leave at a "reduced but still substantial salary." This allowed the firm to keep good talent at a lower cost, and avoided an idle workforce. "Engagement strategies don't have to be expensive, but you must tap into the right resources to make it successful," Wojtkowiak says.
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