HR Best Practices in Tough Economic Times: Part II

A pattern has emerged in Employee Assistance Program (EAP) presenting issue statistics in which the demand for upstream support services rises along with general anxiety over financial issues. Financial issues serve as a leading indicator of rises in many other areas of personal and family stress, and ultimately are the root cause of reduced productivity, ill health and absence.

A recent review conducted by the Shepell▪fgi research group indicated that accesses for financial counseling and consultation are rising at twice the rate of all other EAP services. This trend appears to be increasing, with a 13% higher rate of access for financial issues during the second half of 2008 compared to the same time frame in 2007.

While the types of issues for which employees contacted their EAP have remained relatively stable over the past two years, 2008 saw a substantial increase in EAP accesses related to more serious financial issues, including a 30% increase in cases related to collections issues, a 20% increase in creditor problems, a 24% increase for bankruptcy issues, and a 41% increase for financial counseling related to divorce.

This tells us that not only are employees increasingly turning to their EAP for support and guidance on financial issues, but these issues are growing more serious as the economic downturn has progressed.

Attendance support programs that encourage access to preventive financial education and counseling, as well as management of other areas of personal stress—such as family, childcare, career and workplace conflict issues—can significantly reduce the potential of absenteeism and even disability.

While anxiety due to financial issues consistently ranks up to five times more frequently than worries over personal health as a key employee concern, the spillover effect as noted means that unless employees take care of their financial health, their physical health is likely to deteriorate.

Programs that provide a safety net for employee health challenges, i.e. disability income protection and extended health programs, end up taking a disproportionate hit for problems that could be prevented if addressed early enough. Never is support like this more necessary, and more valuable, than during an economic downturn.

A converging pressure on disability and benefits programs will likely come from the number of older workers who remain in the workplace to regain what they’ve lost in the way of retirement income. AARP predicts that this trend, observed over the last few years throughout North America, will only escalate unless a quick and significant recovery occurs.

Along with a greater number of older workers and the related increase to disability and health care expenses, HR managers may have to look at creative ways to address succession planning for younger workers who find their next steps on the career ladder blocked. Not only will career management, retirement and life transition planning become important, but there is also a risk of increased inter-generational conflict, another trend that we have seen emerge as the employee population has become polarized at each end of the age spectrum.

Taking a preventive approach

We are only at the early stages of seeing the effects of the global economic crisis begin to impact our workplaces. Now, though, is the time to put preventative programs in place to cope with what surely will be the effects.

In addition to a proactive disability management program that offers workplace-based solutions to uncover and address the ‘hidden’ causes of disability—including rising stress, financial pressures, family struggles, and workplace conflict—many are advocating for what might seem like contrarian approaches. The Harvard Business Review asked its key management bloggers to reply to the question: “What conventional wisdom about how companies should behave in a downturn is especially wrongheaded?” Among the HR-related strategies these leading thinkers suggested were:
1. Invest in training and development – even when cost cutting is at the top of the agenda, plan for the future and nurture talent. Team building, leadership, management and communication training are especially important, as these are the skills that will ensure a sustained recovery. They are also the skills that best defray the impact of stress on workplace relationships during the downturn.

2. Don’t consolidate decision-making at the top – let people at all levels of the organization participate in decision-making and problem-solving. Whereas the conventional wisdom suggests that centralizing control, elevating decision-making and adding approval levels decreases risk in a downturn, creating opportunities for participation and innovation may be a smarter strategy. Not only will you foster creativity, but you will lessen anxiety by offering people a greater span of control.

3. Keep customer satisfaction high – while reducing cost of service delivery through continuous improvement and a rigorous attention to quality is vital, doing so at the cost of customer relationships is foolhardy in the long-term. Those organizations that focus on their key customer relationships will stand to emerge from the current crisis ahead of their competitors.

4. Provide inspiration and hope – clear and open communications are critical, and when bad news has to be delivered, be as transparent as possible. But at the same time, involving employees to the extent possible in a shared mission builds camaraderie, strengthens teamwork and boosts confidence. The ‘we’re all in this together’ message needs to be heard loud and clear.

In the coming months, identifying sources of lost productivity and cost will be critical. Even more critical, however, is getting at an understanding of their root causes. In many cases, the return on HR expense will be increasingly measured by the program’s ability to reduce stress, decrease wasted time and effort, boost trust, build resilience and improve workplace productivity.

Since these have long formed the cornerstone of HR’s core objectives, the challenge for leaders will be to ensure that during the tough times ahead, the fundamentals of HR best practice are given equal attention as the fundamentals of the economy.

Karen Seward is senior vice-president, business development and marketing with Shepell.fgi.

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