What the recession did to the workplace: what’s been gained and lost in corporate Britain

The effects of the late-noughties recession are still being felt across society today, in terms of depressed real wages and pessimism about the future for young people. But what impact has it had on the workplace?

Our companies have changed. In the eyes of their employees, companies have become more technically proficient at managing their staff. This is a good and rational response to recessionary times. But it has not garnered them any thanks: employees just don’t seem inspired and supported by what their companies have become. This can only store up problems for companies over the longer term, when those companies will most need engaged and committed employees to help them rebuild through the recovery.

This conclusion comes from our recent analysis of our Representative Employee Data (RED) database of organisation benchmarks, spanning back to pre-recession 2006. Using this, we’ve been able to start unpicking what happened to the UK workplace from 2006 to 2012.

What is the legacy of the recession? Looking at issues like leadership, staff engagement, wellbeing, change and innovation, we’ve identified some interesting patterns in the data that suggest the recession really has changed the workplace in some key – and potentially worrying – respects.

Perhaps unsurprisingly, between 2006 and 2009, employees became far more downbeat about most aspects of how their companies were working. For instance:

  • We looked at key measures like how the company was seen to manage change, how well the company motivated its employees, whether the company was interested in their wellbeing, and whether employees felt they were being developed to their full potential. All of these fell by nearly a fifth.
  • We also looked at employee perceptions of how well their line manager worked with them (setting a good example, delegating well, organising the work of the team, and so on). The proportion of employees who felt their line manager was doing a good job fell by around a sixth.

But at the same time, some key measures hardly fell at all. For instance, the proportion of people satisfied with their work-life balance only dipped marginally. Some measures actually increased between 2006 and 2009: slightly more people were satisfied with the level of responsibility they were given; and there was a slight increase in the proportion of employees who felt their company’s strategy was heading in the right direction.

So as the recession started to bite, some complex – and contradictory – patterns took hold. In particular, while employees became a bit more confident their company’s strategy was right, they became much less confident that the company could deliver it – although, given the headwinds business has been facing, this could be seen as realistic.

It is even more interesting when you look at how those trends continued over the longer term. When you look at the trends between 2006 and the end of the recession in 2012 you find:

  • In general, the recession focused businesses on success factors and better management. In 2012, compared with pre-recession, employees were more likely to feel encouraged to use their initiative, to report that they had clear objectives, and to find the performance appraisal process useful.
  • Some measures fell and stayed low. By and large, the measures that fell most in 2009 didn’t bounce back. Employee confidence in how their companies managed change, showed an interest in their well-being and developed their potential remained around the levels it fell to in 2009, reflecting tougher times.

So what to make of all this? The workplace remains different from pre-recession. Despite having to manage challenging times and difficult messages, line managers seem to have held their own, and to have even improved some of the key tasks of staff management – objective setting, appraisals, and encouraging their staff to take the lead. As a response to tough times, this looks good: UK businesses are managing their people better.

But, while the operational skills of good management seem to have improved, this has been at a cost. Some of the things that really affect individuals’ sense of commitment to their companies – their confidence that change is being well managed, their sense that their company is investing in their wellbeing and potential, their feelings of motivation – have all fallen fast and stayed well below their pre-recession levels. The recession seems to have made companies more technically competent in how they manage, while becoming less inspirational, human and engaging in how they lead.

More effective management is certainly a good short-term response to tough times. But as the economy starts to pick up, there is an inspiration-deficit compared with 2006. One question for leaders to reflect on is why this is happening: is it that in tough times, leaders feel their companies need to focus more on the nuts and bolts, and the pounds and pence rather than the big vision? Is it that they’re just trying to get through the quarter? Or perhaps it’s hard to be inspiring when they feel their own futures are so uncertain?

A more important question for them to focus on is: which of these trends will ‘win’ – and will the benefits of better management be offset by a loss of employee belief in where their companies and their careers are heading? Companies certainly need to keep this under review: the question we – and they – should ask is whether this inspiration-deficit is sustainable over the longer term?

The Ipsos RED database provides benchmark data for over 100 measures of organisational success from over 10,000 employees across the country. It is refreshed regularly: the 2014/15 data is due imminently, and we will be examining this to see if the trends we have identified here have continued as the recovery from recession has picked up pace. Further analysis will be published at www.ipsos-mori.com/employeeresearch as it becomes available.