More Volatility, Less Motivation Expected in 2019
January 9, 2019 – The start of 2019 follows a year in which all major stock indexes recorded their worst performance since the financial crisis a decade ago. The market’s extended volatility is an obvious financial and strategic concern for corporate leaders, according to a new Korn Ferry report. Experts say it also represents a latent and potentially more damaging threat: talent disengagement.
“To the extent that employees’ views turn more negative amid volatility, employers might worry about decreased motivation,” said Mark Royal, a senior director for Korn Ferry.
Numerous studies have shown that employees’ financial issues affect their job performance, for example. And while unemployment is at historic lows and wages are rising, concerns about a global economic slowdown and trade tensions are prompting fears among talent about their future prospects.
Those fears are compounded by the fact that many workers have seen their 401(k) plans and other retirement savings plans lose significant value over the last year, said the report As a result, the “current environment may be creating a wealth effect among talent,” said Mr. Royal.
“Just as reduced portfolios may lead consumers to pull back on spending, employees who are feeling less secure financially may be less likely to take risks,” said Mr. Royal, whose particular areas of focus include relating employee engagement metrics to individual and organizational performance and structuring work environments. “That could lead some to remain in their current jobs and play it safe with income and employment stability.”
Keeping employees on board, however, is different than keeping them motivated and engaged. To do that, Korn Ferry said that leaders cannot ignore the fundamental financial concerns of their workforces.
HR Challenges Expand in the New Year
Today’s workforce is changing at an incredibly rapid rate as transformations in society, government, culture, technology, communications and the legal landscape impact employers and the workplace. With 2019 now here, the workplace will continue to see disruption, and employers are in for more changes as new and different challenges emerge.
Instead, they must reassure them by optimizing and sustaining reward and performance incentives and transparent communications, said Tom McMullen, senior client partner and leader of the firm’s North American total rewards practice. “Leaders can reassess whether base salaries, incentives, equity and benefits are appropriate if there’s an extended bear market; offer differentiated merit increases for high performers and key talent; communicate the value of rewards employees are receiving; and provide regular feedback on how individuals and teams are performing versus what is expected of them,” he said.
Korn Ferry research shows that engagement is not only influenced by employees’ current work experience, but also by their views of the future. “Not unlike the financial recession of a decade ago, the anxiety stemming for the current extended market volatility means it is essential for leaders to ensure that employees feel there is a balance between their contributions and their financial stability,” said Mr. Royal.
Search Consultants Weigh In
“We see similar issues with risk aversion being driven by increased market and economic volatility,” said Drew Desky, managing partner of New York-based executive search firm Rand Thompson Consultants. “Both employers and employees experience this decrease in risk tolerance. Many potential job candidates retreat into a deer in the headlights mentality, hoping to ride out the volatility through a renewed focus on job performance and maintaining a low profile.”
Related: 5 Job Market Trends Expected in 2019
Similarly, employers can implement hiring freezes and/or reductions in their workforce, as warding off increased compensation expenses is viewed as a simple although painful approach to averting financial risk. “What many people overlook, both employers and candidates, is that volatility also gives rise to unforeseen opportunities in the job market,” said Mr. Desky. “Companies can take a hard look at improving the quality of its employee base, as good candidates from competing firms become available. Candidates should likewise scope out opportunities where their skills are better valued or where they can gain a clearer career trajectory.”
“While all the financial volatility and uncertainty caused by a number of global issues has created cause for concern, we continue to see candidates seizing positions with opportunity for growth and advancement,” said Darren DeGioia, president at JDG Associates.
The Global Recruiting Sector is in Growth Mode, But Challenges Loom
Executive recruiters around the world have seen an upswing in business, but talent shortages and demographic changes pose tough obstacles. Here’s how Frank Schelstraete, chairman of InterSearch, thinks recruiters can stay ahead in 2019.
“There’s no question that members of the financial services community are becoming cautious when considering a move to a new employer given the current volatility and concerns around the overall stability of the financial markets,” said Lawrence Baum, founding managing partner of Bay Street Advisors. “However, there is a tremendous opportunity for those who are willing to take a risk and move to a new platform during this period of uncertainty, in terms of both role and compensation. As for financial institutions, they are actively looking for professionals or even teams that can help them differentiate.”
Related: Jobs Report Points to Potential Uncertainty Ahead
“This differentiation means revenue growth, and they’re willing to pay up for top professionals that can bring it to them in both the short and long term,” Mr. Baum said. “The question that every candidate ultimately has to ask themselves is “do I dance with the devil I know, or do I bet on myself elsewhere? At Bay Street Advisors, we focus on helping clients differentiate – whether it’s building or acquiring entirely new businesses or advising them on changes in strategy brought through hiring – which means identifying candidates that are entrepreneurial, self-confident and, therefore, are willing to take the risk for a better future,” he said.
If one is thinking about changing jobs, this tends to be the time of year that many people make the jump. “At this point in the year, if staffers feel insecure as they collect their year-end bonuses, they are more likely to be open to new opportunities,” said Robin Judson, managing partner and group founder at Robin Judson Partners. “The first quarter offers the greatest number of open positions and no one wants to get caught without a job if they can avoid it. At this point, feeling insecure in a current position is more idiosyncratic or company-specific.”
At the same time, whether the job markets are positive or negative, companies should always offer their strongest employees as much support and as many non-monetary benefits as possible. “Everything from strong reviews with guidance to the future to allowing key staffers to attend strategy and/or client meetings passes a message that the employee has a future in the company,” said Ms. Judson.
Related: Economic Climate Creating Challenges for Recruiters
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media