The Era of Employee Power
The memorable past has been about global growth and expansion, low or negative nominal interest rates and unemployment at all-time lows. Technology, for example, has seen 20+ years of hyper-growth where the singular metric of being a “growth" company was determined by how many people you could hire! All of this has been exacerbated by the roughly $5 trillion of government stimulus that has super-charged the U.S. economy in the last few years.
Employees reaped many of the benefits of exponential hiring combined with massive stock market appreciation and little to no focus on performance management. This all occurred in an employment market so tight that you could easily trade-up your role, reaping even more gains and perks from companies trying to win in the so-called war for talent. Through this phase, many employees have not experienced any form of hardship at work and through that, a natural level of entitlement and hubris set in demanding more and more, which many employers have been willing to dole out.
This era of employee power can be characterized by a few important themes:
- The “work from anywhere” shift has been one of the epicenters of the employee power era. Employees are not coming back to the office easily — fighting mandates and encouragement alike — in fear that if they come in one or two days, it will soon become four or five days.
- There has been wage and title inflation as companies recruited and tried to retain employees by adding more and more to the employee value proposition. Over the past two years, employers had to pay employees significantly more in money and benefits to retain their highest performing employees during the “war for talent.” Similarly, as companies recruited, new employees entered with their mandates and there has been scope creep and expansion of roles leading to a mismatch between those who do work and those who manage other people’s work. According to the Washington Post and PNC Financial Services Chief Economist, Gus Faucher, "Wage inflation remains extremely elevated. Businesses are paying the same worker 5 percent more in wages and benefits than they were a year ago. That’s much, much higher than the 2.5 percent to 3 percent increases we were seeing before the pandemic and is contributing to high inflation across the economy.” While wage inflation may align with core inflation statistics impacting the broader economy, the fact of the matter remains that Companies are also being squeezed and cost cutting measures are in progress or on the horizon for most. The easiest and quickest cuts will be reversing the most recent increases in pay and benefits that outpaced historical precedent.
- This has also increased the amount of activity-based work, rather than people being focused on outcomes. The proliferation of meetings and layers of people all trying to drive their agendas has led to higher levels of bureaucracy. Employees have built capacity into their roles and with this, they have taken the opportunity to organize and retaliate against their employers somehow thinking they have “tenured professor” status rather than “at-will” employment status, which can be seen in the visceral negative content delivered towards employers in company-wide Slack channels or through anonymous external platforms like Fishbowl.
The view that employers should treat employees with white-glove service and provide the highest levels of empathy and flexibility is now an expectation for many, and the unfortunate matter for some employees is that this may be the only model they have known in their working lives. New personal trends are highlighting the shifting default to a “personal convenience” model of work for employees. The airlines have suggested that every weekend is now a long weekend and Thursday afternoon is now the new Monday at airports. The afternoon “fun economy” is booming — with activities like afternoon tee times, workout classes, yoga and beyond completely booked.
The Shift to Employer Power
Power dynamics are pivoting from the employee to the employer, and it is going to be a tectonic reset for many employees who only know the employee-power version of the world. The awakening has started; for instance, in financial services many CEOs have taken a hardline approach, by setting the default at four or five days a week in the office for all employees and adding guard rails to perks like meal expenditures — both in terms of re-defining allowances and requiring employees be in the office to take advantage of this benefit. Other employers have moved to a three or four day in-office program, with some flex on the other day or two — or as needed. As we head closer to a global recession (and we have already pivoted in the technology sector from “potential-led” to “performance-led”), more CEOs will start the process of undoing the excess of their hiring bonanzas and declaring a new “era of efficiency” (code for a lot fewer people). First in the queue will be those whose office security cards have not been scanned in over a year (it’s easier to just keep them at home permanently)!
As the shift gains further momentum, employees will experience a lot fewer perks, an expectation around being in the office a lot more and less flexibility on “personal convenience.” The performance management machine is going to go from nonexistent to extremely robust and this will lead to more shedding of people. CEOs are focused on moving from low density over-hiring to high density performance-managed hiring and retention. The expectation of doing more with less, being able to bootstrap, and being resourceful will be very high. The expectation will be less complaining and more focus on having real grit and the ability to deliver outcomes rather than pointing to so many activities.
Wage and title deflation is also happening, and people will stop seeing massive stock appreciation and bonuses that have become expected. We are entering into a much harder world and many employees have not experienced real hardship in the workplace, and even middle career employees have not experienced it in many years — where layoffs are a regular thing and being able to simply pick up another job because there is so much slack in the system will be gone.
This is a new era where highly motivated employees at all levels can differentiate themselves like never before through engagement, resilience, and having a can-do, solutions-oriented view of the world rather than “complaining and explaining.” They can show their willingness to come into the office and engage with people in-person to work through the hardest issues by editing and problem-solving to deliver a better outcome for the company, and ultimately for themselves.
