Just announcing cuts has big effect on staff engagement

01 June 2015

Austerity policies being announced lead to an overall drop in employee well-being, job satisfaction and engagement before the cuts are even implemented, according to new research.

Academics looked at the UK Government’s 2010 Comprehensive Spending Review (CSR) when Chancellor George Osborne announced a budget reduction of 19 per cent over four years to a host of Government departments. The Office for Budget Responsibility predicted it would lead to the loss of 490,000 public sector jobs by 2015, representing about 10 per cent of overall public sector employment.

Tina Kiefer, of Warwick Business School, revealed her research had found evidence of an immediate drop in employee job satisfaction, well-being and engagement among public sector workers. And six months after the announcement the more changes were implemented the more they fell even more. But if the changes were innovative rather than salami-slicing, public sector staff reported an increase in well-being, job satisfaction and engagement in their job.

Professor Kiefer said: “The announcement had a clear short-term impact, while the organisational changes themselves affected employee well-being, attitudes and behaviour over the longer term.

“Not many would have expected the actual announcement, rather than the subsequent changes, to affect public service employees in this way. But an announcement about cuts is an event with ‘real’ impact that signals potential changes to employees’ jobs and career prospects. It also hit home the scale of change, which may have confirmed - or been worse than - employees’ expectations.

“Our results highlight the importance of understanding employee reactions to nationally instigated policies, rather than merely focusing on what happens within an organisation when organisational changes are implemented.”

In the paper Feeling the squeeze: Public employees’ experiences of cutback and innovation-related organizational changes following a national announcement of budget reductions, published in the Journal of Public Administration Professor Kiefer, Jean Hartley, of Open University Business School,  Neil Conway, of Royal Holloway (the University of London), and Rob Briner, of Bath School of Management, surveyed nearly 750 public sector workers before, just two weeks after the CSR announcement and then six months later to see the impact of any changes.

Professor Kiefer said: “Public service employees responding during the two weeks after the policy announcement reported lower well-being and more negative attitudes towards job satisfaction and job security compared with participants responding during the two weeks before the announcement.

“This is because participants responding after the announcement would have been exposed to budget debates across the media, as well as in organisational communications and discussions.

“The post-announcement group is thus likely to have spent more time reflecting on the implications of the budget reductions for themselves as employees and professionals.

“The announcement was likely discussed in meetings and coffee breaks, shaping a narrative about the impact of the budget reductions and having negative effects on attitudes and well-being.”

Professor Kiefer believes the study highlights that public bodies may be more affected by what goes on outside the organisation than is typically assumed, as they are more at the discretion of outside changes and influences than firms in the private sector.

“It further highlights the fact that organisational boundaries are permeable and what happens outside them can have a big impact on those inside,” said Professor Kiefer. “This is notably the case for public organisations, which are to a greater degree inter-dependent on the external political, economic and social environment.”

The public service employees in the study underwent huge change following the CSR announcement, with redundancies, cuts in service provision, freezing and cuts in budgets plus merging of teams or services all increasing dramatically, while also finding new ways of providing services and working in partnerships.

But the study found that not all the changes had negative effects on staff. When the CSR led to cuts in resources and numbers workers’ well-being, job satisfaction and engagement dipped, but when innovative new practices were introduced to deal with the reduction in budget the researchers found a positive impact on morale and engagement.

Professor Kiefer said: “This result has really surprised us. Our results demonstrate that ongoing change can have positive outcomes for employees, if such changes introduce procedures and processes that are novel to the organisation, both with respect to internal processes and serving the public.

“In particular, we found that an increase in innovation-related change saw an increase in positive well-being, job satisfaction and job engagement.

“From an employee perspective, innovation may often be experienced as a more participative and involving process rather than something that is ’done to me’, and so enhancing engagement with the job, satisfaction and positive mood.”

It shows that when the focus is not on cutting resources, change in an organisation can leave workers’ morale boosted even if they have lost staff and budget.

“The study provides a more detailed analysis of the often-stated but ill-founded assumption that people simply do not like change,” said Professor Kiefer.

“Our results suggest that employees of public organisations are negatively affected by one particular type of change - cutting back resources - but benefit in terms of well-being, job satisfaction and engagement from another type of change, in this case innovation-related change, suggesting that not all change is experienced negatively.

“As public and private organisations face continuing financial constraints in a number of countries, understanding the effects of different types of change on employees may become increasingly important.”

Find out more about Human Resource Management on the MSc Human Resource Management & Human Relations which can also be done part-time at The Shard, London.

Professor Tina Kiefer teaches Management of Change and Organisational Behaviour on the Warwick Executive MBA. The Warwick Executive MBA can also be studied part-time at The Shard, London over two years.

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