Leaving the European Union is a substantial step for any member state to take. The decision is in many ways a social, cultural and political one, but it is also one which carries economic implications. The United Kingdom’s decision to leave the European Union, or ‘Brexit’, has consumed much debate. The magnitude of the economic costs and benefits of Brexit cannot be known with certainty before the event. The unexpected result of the vote and its ensuing fallout has created an atmosphere of instability and ambiguity, which never bodes well for the economic climate.
As per the data from Adzuna, a job-search website, their count of new job ads put up was 29,000 compared to 39,000 (This is week on week number), a worryingly large fall of 26%. The count of new ads over the past seven days is 570,000, compared to 615,000 the week before (a 6% fall). Employers, it seems, are already less keen on hiring. Many companies opt for stack ranking (also known as “20-70-10” system) of employees in this situation, which creates job insecurity and demotivation among the workers. The workers are divided into “A” (20%), “B” (70%) and “C” (10%) players, where A being the top performer, B the vital majority and C being the poor performers. The “C” workers are let go as management feels this way they can kill two birds with one stone – 1. Reduce workforce costs ahead of tough time, 2. Avoid letting go of the vital majority for some time. However as the workers are not told their ranking, it creates a sense of job insecurity among “A” and “B” players as well, since they feel they would be the ones in the next round.
As a result, “A” performers start leaving as they are in a position to secure alternative jobs even in a tough economy. So the business is in some ways stuck with “B” players as they do not find jobs as easily in the tough market but with the insecurity and de-motivation their productivity drops and can very quickly become “C” players. So very easily the companies can be left with “C” players that they were trying to reduce to begin with.
When you force employees to fit into a pre-determined ranking system, you do three things:
1) Incorrectly evaluate people’s performance, by forcing line managers to fit their teams in the 20-70-10 bell curve model
2) Make everyone feel like a number, and
3) Create insecurity and dissatisfaction when performing employees fear that they’ll be fired due to the forced system.
This flux and uncertainty of Brexit is an opportunity for the HR professionals to not be reactive but be proactive. As an HR professional if you are proactive then you not only prevent “A’s” from leaving but also motivate “B’s” to become “A” players. You should consider that people have responsibilities toward their families and they have bills to pay every month. The best reassurance and benefit one can provide in these tough times is the freedom from financial distress.
It is time for companies to start focusing some of their HR efforts on tackling financial stress. With the new breed of employee benefit offering money management tools; it’s now possible to do this effectively and in a targeted manner. Employers should tie up with financial employee benefit providers like FairQuid that provides access to savings and affordable loans through local Credit Union partners. The employees irrespective of their salary scale just have to fill in the loan application form online from the convenience of their office desktops. The saving contributions and repayments are automated through payroll deductions; therefore they don’t have to worry about missed repayments. Since Credit Unions are providing this facility based on their employment and length of service with the company, it encourages the employees to stay with the company till the loan is repaid and thus helps directly reduce the turnover rate in the short term. Thus FairQuid, through its Credit Union partners, provides financial freedom to one and all irrespective of their income.
Giving employees the tools for financial resilience can break the needless spiral of anxiety and stress. This is crucial as far as productivity is concerned, where the impact of financial stress on the workplace can be dramatic.