Employee relations: Cost management v people management? (page 2 of 2)

A model of the psychological contract

* It is a problem with more modern flatter hierarchies that within Internal Labour Markets job roles don't exist in order to promote staff into them. This results in highly trained, but frustrated staff who have nowhere to go in the organisation. Employees are then liable to leave and employers are left to recruit from the occupational labour market, leading to a huge loss of intellectual capital and high recruitment costs.

People Management for Managers

Businessess can improve their psychological contract by moving away from the out-dated practice of cost management and train their managers to concentrate fully on People Management. Practical methods are listed:

• Assess manager's people management skills, address any lack
• Train line managers in people management skills: employees are more likely to trust their line manager
• Ensure managers commit to key messages: mixed messages will have a negative influence on employee attitudes
• Inform and consult employees about proposed changes: they are more likely to see the outcome as fair.
• Take care to fulfil commitments made to employees: managers say employees show more commitment to their employer than vice versa
• Consider if you need to renegotiate what employees are entitled to expect: otherwise they may feel let down when circumstances change
• Put more effort into managing change: employees believe change is badly managed
• Give employees more responsibility: autonomy increases satisfaction
• Use employee attitude surveys to get a clear idea of what is happening in the organisation:employees often do not share senior managers' views of reality
• Don't use tight management and close supervision: this will reduce employee satisfaction
• Use recruitment and appraisal processes to clarify the 'deal': employee expectations are influenced by a number of factors
• If you can't keep a promise, explain why: broken promises lead to a loss of trust
• Trust employees to do a good job: most are highly motivated to do so and will respond to the trust you show in them
• Benchmark salaries and take into account cost of living increases
• Don't forget the reward part of appraisals/performance management systems to motivate employees
• Be aware of changing expectations: for example, more employees now want to work for organisations that behave responsibly
• Ensure consistency of treatment: perceived unfairness undermines trust
• Treat employees fairly but understand that with status comes different rewards and fringe benefits
• Hold team meetings and focus groups: two-way dialogue will help identify issues at an early stage
• Do not understimate or take employees for granted

Conclusion

The psychological contract reinforces the need for managers to become more effective at people management. Employees are becoming both more critical to business performance and more demanding of the organisations for which they work. In the business environment of the U.A.E , true competition on value, service and product has yet to reach its zenith, however, when it does outstanding performance will be essential to survival. This level of performance cannot be achieved by downsizing or cost-management: it will only come from persuading employees to make a willing contribution, by setting the right company environmment. It is evident that businessess actively engaged in people management and pursuing the psychological contract will have productive, involved and engaged staff and will meet their goals. No doubt, those outdated companies with managers following the cost management model will quote the benefits of control and achieving the task, but will they sing the same tune when their staff underperform, eventually leave and their recruitment costs spiral?