It feels like every other week another business is announcing more rounds of layoffs, while — paradoxically — making record profits. That’s not how employee and employer relationships used to work.
What could make profitable employers need to do layoffs, especially if AI doesn’t actually improve productivity like its endorsers claim? And how can businesses go on to make even more layoffs the following year if they’re not making gains using AI?
Employees now live in a state of fear, waiting to be told their job is next in line to go.
What went wrong with employee and employer relationships? How did we get here?
The societal contract has been broken
Everyone was promised if they worked hard, they’d be able to buy a house, go on vacation, and start a family. It was the foundation of the employee and employer relationship.
Now, even if someone works full-time and overtime, there’s a high chance they still won’t be able to afford to buy a house. They probably can’t even afford a vacation.
The average cost of a house in the US is now $500,000. In some areas, it’s over a million. On an average worker’s salary that isn’t achievable.
Sure, the folks in big tech earning millions can afford it. But what about the people who grew up in those cities and don’t want to leave, but have found themselves priced out? And therefore have no choice but to leave if they want any money left at the end of their paycheck?
The closing of third spaces
When the breakdown of employee and employer relationships means employees can’t afford to spend time with friends, or buy a decent meal out, they already come in to work with less energy and enthusiasm.
Socializing helps us recharge. It’s imperative for our physical and mental health — people in so-called “Blue Zones” who live to over 100, have large social circles.
But we’re losing third spaces and those that still exist are struggling to pay their own bills. So they raise their prices.
Then nobody can afford to go in.
So then more third places close and there are fewer places for people to meet.
And fewer places for them to recharge.
The lack of job security
The days of working in the same place for your whole career are over. It’s rare now for someone to stay in a role beyond five years, although that may change due to the current market and the rise of job hugging.
Even when someone is job hugging, though, if the company has made multiple rounds of layoffs, there’s a significant chance they’re afraid they’ll be next.
One round of layoffs is bad for morale. Several are cataclysmic. Regular layoffs chip away at employee and employer relationships and create a culture of fear.
Instead of feeling able to think clearly, fear clouds employees’ judgement.
Even if they want to work hard so that they can stand out and keep their job, they may not be able to.
Fear has a huge subconscious impact on our brains, and we’re not always cognizant of it until it’s over.
A fear of losing a job isn’t just a fear of what’s on the surface, though. Someone without job security is at risk of losing their house, car, and even their partner. The fear ends up permeating every aspect of their lives.
The lack of teamwork
When employees are measured on individual performance, and let go or put on a performance improvement plan (PIP) if they’re in the lowest-performing group, nobody cares about supporting their colleagues anymore.
So of course people won’t feel able to work as a team. They’re too busy thinking about their own jobs and how they can stand out. That can require stepping on their teammates to reach the top.
Without a culture of teamwork, businesses will never reach the upper echelons of success. To innovate, businesses require teamwork. They require diversity. They require strong employee and employer relationships where people feel supported to succeed.
The lack of training
Training isn’t what it used to be, either.
Gen Z workers don’t always get it when they start a new job, they don’t get it at school or college, and their parents are too overworked to help. So how do we expect them to navigate work?
Then only half of managers get any training, and employees rarely get development opportunities anymore either.
Training initiatives are often one of the first things to go in crumbling employee and employer relationships. They’re seen as a nice-to-have, but they’re actually crucial for employee morale and company innovation.
Employees who do get training opportunities may feel too tired or burned out to be able to learn anything new, too.
The math isn’t mathing
Without the employee piece of employee and employer relationships, no business can succeed. And yet CEO pay is up 136% since 1978 and employee pay is up just 28% in the same time frame.
In my home city, if I applied for a full-time in-office role for a private organization, the pay would be almost identical to what I earned a decade ago. Even though minimum wage in the UK has gone up more than what I earned at the start of my career in the early 2010s.
And despite the fact I’d have to pay for travel to get to an office and everything costs considerably more.
This isn’t unique to where I live: my friends have experienced the same. They’re finding it harder than ever to get full-time work that will cover the basics, let alone little luxuries like a book, makeup, or a meal out.
Many small businesses I know are struggling right now. Even small purchases that were previously seen as recession-proof are either too expensive or just not justifiable when household finances run on such small margins.
Return to office mandates
If someone is already struggling to pay the bills, how can they afford to travel into the office?
Travel, parking, and gas prices have gone up. And keep going up. This eats into someone’s wages before they’ve paid their rent or mortgage.
That means if someone works in-office, they have to live closer to it.
If they’re in a city, that makes where they live more expensive, giving them less money for daily essentials or little luxuries. Offering meals in the office isn’t enough to bolster employe and employer relationships. It’s about so much more than that.
Conclusion
The implied social contract between employees and employers is broken. Decades of managed decline from politicians and businesses has left us in a tough spot. It’s not fixable overnight, but there are things your business can do to support your employees and show them that you really are different.
Stay tuned for next week’s post where we’ll explore what businesses can do to rebuild damaged employee and employer relationships.
