Thought leadership

Will the COVID-19 Pandemic Alter the Drivers of Employee Engagement?

Will the COVID-19 Pandemic Alter the Drivers of Employee Engagement?

The COVID-19 pandemic is unprecedented in its global reach and pace of spread throughout communities worldwide. Its trajectory underscores the increasing need for organizations to continually assess their approach to protecting the safety and security of employees, including a significant focus not only on the physical wellbeing of the workforce, but also emotional wellbeing and employee engagement.

Only time will reveal the full array of COVID-19-related impacts on our workforce and organizations, however important lessons may be learned from past periods of extreme trauma and how these events directly impacted the attitudes and needs of employees.

Over the past fifty years, the nation has been confronted with numerous catastrophic events, both man-made and natural, that have profoundly impacted the wellbeing of the workforce, disrupted operations of companies, and harmed the economic growth of the nation — conditions evident today as a result of the COVID-19 pandemic.

Throughout history, periods of “good times” (when businesses and workforces thrive) are always interrupted by “bad times.” Fortunately these bad periods are usually shorter in duration and recoverable. We have now entered a bad time. How do times of great trauma impact the attitudes and needs of a workforce? More specifically, what propels workforce engagement during bad times, and how do these drivers differ in comparison with drivers during good times? By answering these basic questions, Gallagher can offer important guidance on the workplace issues expected to gain significant strength and become the most powerful influencing factors on sustaining an engaged workforce through the COVID-19 pandemic.

Gallagher’s employee benchmarking U.S. database covers approximately five decades, representing many periods of economic expansion and growth, relative geopolitical calm and national stability — periods not significantly impacted by catastrophes. The workplace issues that most impact engagement during good times have a strong presence of “local” or team-specific issues that strongly shape and sustain high levels of engagement among the workforce. Using the S&P 500 index as a proxy for both economic and organizational health, there are numerous multi-year spans generally considered to be good times.

During good times, high levels of engagement tend to be largely predicted by survey items dealing with local factors, including a positive sense of teamwork, a healthy positive relationship with managers and/or supervisors, enjoying coworkers, understanding the goals of their immediate team, experiencing opportunities for growth, development and training, and receiving positive encouragement and recognition for their contributions. While year-by-year the rank order of these drivers tend to shift, these drivers habitually (not in any specific order) manifest as key drivers of the broad U.S. workforce during good times.

To investigate bad times, rather than look purely at macroeconomic indicators like the S&P 500, catastrophic events that remarkably damaged the nation for extended periods of times were considered — both economically, as well as emotionally in many cases. It is important to note that the COVID-19 pandemic is unprecedented in modern times and poses a very different set of threats and consequences in comparison with past events that have disrupted the nation.

However, similar to events of extreme disruption faced in past years, COVID-19 is imparting a grave sense of uncertainty, confusion, panic, anxiety and fear, which were all present in different ways and intensities during a variety of events that have confronted our workforce over the past 50 years.

The pool of bad times includes examining employee attitudes primarily during three “bad periods.” These include:

  • Oil crisis (1973)
  • September 11th (2001) terrorist attacks
  • Subprime mortgage crisis (2007-2009)

 

 

Each of these events inflicted deep emotional and economic impact to our workforce and the U.S. From a purely macroeconomic standpoint, the S&P 500 pullbacks associated with these events were significantly greater than the increases associated with good times.

The key drivers of engagement during these bad periods reveal remarkable consistency with respect to what employees need in order to maintain a sense of engagement about their work and their organizations. The key drivers during these bad periods pivoted away dramatically from local issues and focused heavily on broader organizational-level survey items, such as:

  • Having strong confidence in senior executive leaders
  • Receiving timely and honest communications from senior executive leaders
  • Believing the organization’s products and services will preserve the business
  • Understanding the organization’s strategies and business objectives
  • Feeling a sense of job security
  • Believing that total compensation and rewards are fair
  • Having opportunities for growth, development and training

 

The only observed crossover among top drivers of engagement during good versus bad times deals with opportunities for career growth.

Although Gallagher does not have survey data spanning back to the Great Depression era (1929 to the late 1930s), it is an important period to note. Consider that the S&P 500 shed 86.2% from its high and the labor force experienced an unemployment rate as high as 24.9% (1933).

By any definition, the Great Depression was one of the most devastating times ever faced by our nation. In 1934, R.S. Uhrbrock published a seminal article documenting what drives employee satisfaction during the Great Depression. Using one of the most advanced statistical analyses of the time, Uhrbrock found that the most predictive workplace issue that built enthusiasm among workers was when senior executives communicated regularly and robustly in an honest and open way with employees.

Although this finding was published nearly ninety years ago in the Journal of Social Psychology, its findings show that humans craved then what they crave now during times of remarkable instability.

Gallagher’s findings suggest that when times look especially bleak and uncertain, employees tend to be most enthusiastic about their workplaces when they are armed with information directly from the top, and when they have plenty of confidence in the stability of the organization. Perhaps one of the most interesting findings is how rapidly the drivers of engagement shift when moving from good times to bad times — particularly when the bad times are triggered by a catastrophic event.

Gallagher’s research suggests that the healing process takes longer. Key drivers of engagement do not rapidly spring back to classic “good times” drivers following a tragic event. Once the event has been dealt with and business has bounced back with great strength, the drivers move more slowly as they reorient from organizational-level issues to more local level issues. In fact, it appears that it can take two or three years of “good times” to fully shift back to a heavy tendency toward local issues.

Also important to remember are the connections between employee engagement, wellbeing, resiliency and burnout. What is happening at work has a very significant impact on an individual’s overall quality of life and wellbeing. The stress associated with the current levels of instability in our workplaces can reduce our resiliency, which leads to greater potential for burnout. Burnout characteristics can include fatigue, exhaustion, panic and anger — and further erodes employee engagement.

 

So what can you do now?

Based on history, during remarkable periods of uncertainty employers can expect employees to crave knowledge about the overall strength of the organization. They will want to know how problems are being addressed, and they will want to be reassured that they will be alright because senior leaders are providing excellent stewardship.

Concurrent to transparent, authentic and timely communication efforts, organizations can focus on efforts to enhance connectedness and social support. This helps build resiliency — undoubtedly a key condition to help combat feelings of exhaustion and helplessness. It is also of vital importance to help leaders understand how powerful their behavior will be toward influencing the wellbeing of their employees.

 

At Gallagher, our goal is to help organizations weather this time and to face the future with confidence. Please contact us with any questions you may have.

 

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©2020 Arthur J. Gallagher & Co.
 

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David Rowlee

 As the Managing Director & Service Line Leader with the Employee Engagement Surveys service line for Gallagher’s Human Resources & Compensation Consulting practice, David Rowlee oversees a team of highly skilled researchers and ensures the delivery of leading edge measurement capabilities, advanced empirical analyses and innovative research studies to inform the operations and strategies of our clients. David has more than 20 years of human capital research consulting experience with special emphasis in the field ...

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