Finding a Healthy Balance for the Employer-Employee Relationship

By: Vaso Perimenis

I have been an HR practitioner for many years. My undergraduate degree is in economics and I usually write about HR centric topics. But lately, I have turned my attention to business, its impact on employees and our world.

Drawing on my Greek roots, “nothing in excess” was one of the three phrases carved into the Temple of Apollo at Delphi. This article is about how companies need to find balance.

We often talk about employee engagement, resilience and experience. Rationally, most businesspeople understand that the people, more than any other ingredient, is the most important part of the organizational recipe. Yet the employer-employee relationship has changed over many years in ways that contradict this understanding.

While in the past employment was a long term contract with an employee acquiring skills ‘on the job’ and rising through the ranks, today it is “dominated by short term contracts for highly skilled professionals and technical workers” (Smithson and Lewis, 2000, Lester and Kickul, 2001). No longer do employees retire from the same organization where they began their careers.

According to the Bureau of Labor Statistics, the average employee tenure in 2018 was 4.2 years. In many companies, the psychological contract that once existed has been broken.

Employees today have become demoralized by slowly rising salaries or, in some places, salary cuts. They have grown tired of being flexible and working long hours, only to get disappointed when that flexibility is not reciprocated by their companies in the way they want. Both employees and employers have conflicting expectations and business requirements. In many cases, trust has eroded. Employees expect more and so do companies.

Employees and employers should aspire to have deep and lasting mutual engagement, but the aspiration will rarely lead to attainment of that goal. This is because the relationship has lost its balance. But what could have caused the imbalance?

The Balance

Most problems have multiple causes. Once such cause for the relationship imbalance is the shareholder theory that is credited to Milton Friedman, the University of Chicago economist and Nobel laureate. In 1970, Friedman argued that because the CEO is an “employee” of the shareholders, he or she must act in their interest, which is to give them the highest return possible. Friedman’s theory gained momentum because it seemed to absolve corporations of difficult moral choices as long as they made profits.

READ: The Evolution of the Modern HR Business Partner

Simon Sinek wrote a book called “The Infinite Game”, built upon Professor James Carse’s work. Sinek posits that the power of a company isn’t determined only on the day’s stock price. If a CEO concentrates only on share price and making shareholders happy, he/she not working in his/her firm’s advantage.

We tend to see the world in terms of successes and failures, winners and losers. This default win-lose mode can sometimes work for the short term; however, there are longer term consequences. Those include mass layoffs to meet goals, harsh work environments and lack of psychological safety.

HR’s Focus

As HR practitioners, where do we go from here? Do we continue to focus on employee engagement or resilience knowing that we may need to facilitate reductions in force or freeze merit increases? The immediate answer is yes. Never give up. Although it sometimes feels like an uphill battle, HR must continue to the conscious of the organization. Our job is to support the business through a people lens, striving for balance in every decision.

The longer-term answer is much more complicated.  Sinek suggests that companies need to have a just cause where they would willingly sacrifice their interest to advance that cause. In that scenario, companies don’t play to win – whether its market share, financial growth or stock prices. This fundamental shift in philosophy and principles will shape company culture and trust.

Becoming Doughnut Companies

Kate Raworth, an Economist, created the Doughnut Model of Economics. The aim of economic activity, she argues, should be “meeting the needs of all within the means of the planet”. Instead of economies that need to grow, whether or not they make us thrive, we need economies that “make us thrive, whether or not they grow”. This means changing our picture of what the economy is and how it works. The same concept can be applied to the microcosm of a company.  Instead of companies that need to grow, whether or not they make us thrive, we need companies that “make us thrive, whether or not they grow”.

With a just cause and a doughnut model of economics, can companies find better balance in their ecosystems, where employees, customers, shareholders can all thrive?  In that balanced world with less volatility, perhaps trust, company culture, employee psychological and physical health can have a chance to be restored.

In the meantime, HR practitioners should continue to learn, improve, add-value and be the stewards for a healthy company culture

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