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In Network, the cult-classic 1976 movie about the television industry, anchorman Howard Beale, whose failing news program is about to be cancelled, famously announces, “I’m as mad as hell and I’m not going to take this anymore!”
Fast-forward to this year, and it's bosses and their corporate chiefs who appear to have had enough of giving in to various employee demands. Tech executives, for instance, have been warning employees that the uncertain economic outlook will result in widespread belt-tightening and that they have to work with “more hunger” or else there will be “blood in the streets.” It's not just bosses in the tech industry making the threats, either. Network was a commentary on corporate America’s singular focus on the bottom line, but the tough talk from managers is squarely aimed at getting more productivity out of employees.
After two years of remote work, flexible scheduling, compensation premiums for new hires, and more, managers are growing frustrated with what they view as exorbitant employee expectations, says Gloria Mirrione, sector leader for asset management and co-leader of the Impact Investing practice at Korn Ferry. She says managers see the current economic downturn as a reason to move away from some of the “newer conditions of employment” brought about by the pandemic. “Their intention is to revert back to some of the employment norms that drove business before COVID,” says Mirrione.
After stock prices swelled because of the reliance on digital services during the pandemic, the performance of the tech sector has come back to earth, putting managers under immense pressure to improve financial results. The share prices of most of the best-known technology companies are down almost 30%. That’s well below the 5% to 10% declines so far this year for the three major stock indices, the Nasdaq, S&P 500, and Dow Jones Industrial Average.
But managers in the tech sector aren’t alone in feeling the financial pressure. Other sectors whose stock-market performance is especially poor include health care, transportation, and consumer discretionary, which counts apparel, automotive manufacturing, recreational products, appliance, and other company stocks among its industries. So far, roughly one-quarter of S&P 500 companies missed revenue and profit expectations during the second-quarter. Numerous companies, including those in the retail and financial-services sectors, have lowered profit forecasts for the remainder of this year. At the same time, historically high inflation and continued supply-chain disruption are driving up the costs of goods and services in every industry, prompting consumers to cut back on spending on restaurants, travel, clothes, and other discretionary expenses.
While a crackdown on underperformance may be warranted, experts wonder if it is the most effective way to rally employees. Nathan Blain, global leader for optimizing people costs at Korn Ferry, says threats about cost-cutting and layoffs do nothing but make workers afraid. “Companies don’t become more successful by scaring employees,” he says.
Blain says managers would be better served by educating employees about the implications of poor financial performance and aligning them with an “owner’s mindset” to get everyone focused on the same goals. “Managers need to get the tone right to create a sense of urgency among employees that results in increased productivity,” he says. Working longer and harder isn’t the only way to improve performance. Working smarter, with better tools and higher levels of engagement, can be just as effective, says Blain.
John Long, North America retail sector leader in the Retail and Consumer practices at Korn Ferry, says managers are still trying to find a balance with employees in the new world of work. The harsh reality is that companies across industries are already instituting hiring freezes, laying off workers, and shifting modes from profit generation to cash conservation. Layoffs have become so common that job-search website LinkedIn keeps a daily running tally of them that is among the site’s most-read pages. To be sure, the ongoing labor shortage is a continuing source of frustration for managers, says Leila Lance, a Korn Ferry senior client partner and advisory leader in the firm’s Global Technology Market practice. There were still 10.7 million job openings at the end of June, or nearly 5 million more vacancies than available workers. In the absence of having teams at full strength or the ability to hire more people, many managers have been shouldering the extra workload, says Lance. “It’s been a long time since all jobs were filled," she says.
Against that backdrop, from a management perspective, asking employees to come back to the office a few days a week or pushing them to be more productive seems reasonable. It may also be exactly what employees, who want to keep their jobs, are eager to do. “At some point, bosses need to act like bosses, and say what needs to be said,” Long says.