Human Resources

Overworked & Understaffed

Recession erodes employee morale and leaves staffs stretched thin.

April 01, 2011
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  • Maintaining peak productivity with a downsized staff is the biggest HR challenge facing many CUs.
  • Short-term benefits of this strategy are impressive, but negative consequences are beginning to emerge.
  • Board focus: Support flexible work arrangements—such as telecommuting, flexible hours, and mobile technology—when possible to retain top talent and boost morale.

Overworked and understaffed. Welcome to the post-recession workplace.

Keeping employees engaged and motivated in an environment like this will be the greatest human resource (HR) challenge for the foreseeable future, according to a recent poll of HR executives conducted by the Society for Human Resource Management (SHRM).

Most employers are operating at much lower staffing levels than they did before the recession. And despite some signs of economic recovery, employers are taking a cautious approach to hiring.

To encourage employees to perform at their best, employers will need to improve morale and engagement levels, and possibly boost retention efforts.

At the height of the economic downturn, employers were forced to downsize staffs. As a result, many organizations have become accustomed to delivering their core products and services with fewer employees, according to Michael Norman and J.P. Elliott of Sibson Consulting.

“While the short-term benefits are obvious, the long-term implications of this new way of working aren’t as apparent,” they say.

Norman and Elliott say some of the problems emerging from the “do more with less” strategy are:

• Diminished capacity, capability, and agility. Not being properly staffed can directly influence your cost structure, cash flow, and ability to deliver financial services.

Misaligned organizational structure. Rapid reorganization of business units or functions has led to organizational structures that are no longer aligned properly to support the business model.

• Broken business processes. Even before the economic downturn, many organizations didn’t document core business processes or support them
with technology. If employees with knowledge of manual processes were let go, business processes suffered.

• Declining work force engagement. While downsizing can improve productivity, it can also damage employee morale. Disengaged employees will be the first to go when the economy improves.

“The costs and complexities of doing more with less are real,” say Norman and Elliott. “But this way of doing business is here to stay. The challenge is to operate in this environment while keeping employee performance and engagement high.”

Hiring & pay plans

Most employers are waiting for the economy to stabilize before hiring full-time staff. Employers have grown accustomed to getting the job done with fewer employees or by using part-time staff or temp agencies.

But the number of employers planning to hire full-time staff is gradually increasing, according to CareerBuilder’s annual job forecast. About 25% of employers plan to hire full-time employees in 2011, up from 20% in 2010 and 14% in 2009.

While credit union data on this improvement is being tabulated for CUNA’s 2011-2012 Complete Credit Union Staff Salary Survey Report, credit unions appear to be part of the increasing hiring trend.

Several reports indicate employers have budgeted for wage increases averaging 2.8% in 2011. This is higher than increases in the past two years, although still lower than pre-recession levels.

About 76% of employers that froze pay between June 2009 and December 2010 have either rescinded the pay freezes or plan to do so soon, according to research from Buck Consultants.

But pay freezes might not disappear completely, warns Tom Burke, principal at Buck Consultants. Wage increases depend on economic stability, sustained growth, and significant improvement in the employment rate, he says. Instead of increasing base pay, many employers are offering incentives tied to organizational growth and keeping the lid on base-pay increases.

The Dodd-Frank Wall Street Reform and Consumer Protection Act released new requirements regarding executive compensation. The provision affecting credit unions with more than $1 billion in assets requires disclosure of all incentive-based compensation arrangements to determine if they’re considered excessive or risky and could result in a material loss to the insurance fund. At press time, NCUA was expected to issue a final rule in April.

Next: Health-care costs

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