Why employee loyalty to some companies will never be the same post-Covid-19

Layoffs. Redundancies. Pay cuts. Terminations. Barely a day elapses before we hear of more staff rollbacks due to the latest coronavirus.

Undoubtedly, as the Covid-19 pandemic rambles on, it leaves a wave of economic devastation in its wake. Supply and demand shifted, value chains disrupted, and restrictions imposed. However, much of the coronavirus spread and economic predictions have not proved as severe as once feared.

Pre-public health crisis, the African Development Bank forecasted Kenya’s economic growth in 2020 at a staggeringly high six percent and in 2021 at 6.2 percent. Once the Government of Kenya’s proactive public health protections came into force, the World Bank in April lowered our economic growth prediction to a lower but still positive 1.5 percent for 2020. But, a GDP increase of 1.5 percent in the face of a global pandemic is still remarkable.

However, during the start of coronavirus’ unceremonious entry into Kenya, many organisations retrenched staff or lowered salaries. These economic hardships will be remembered for an entire generation. The proportion of Kenyans’ savings rates as a percentage of our monthly salary will likely go up after coronavirus and remain higher for decades to come. This generation will want to ward off any future uncertainty after living through the doubt and ambiguity of this pandemic.

But something else will remain high with this generation for decades: distrust of employers. Already an entrepreneurial country, expect to see an explosion of entrepreneurship as coronavirus predictions ease and better treatments and eventually a vaccine proliferates. Kenyans will want to be in greater control of their economic destinies.

Many current or displaced workers during coronavirus feel mistreated by their employers. Clearly businesses directly involved in the tourism, hospitality, and private primary schools sectors, among others, plainly experienced harsh immediate cessations of their entire business models. Inasmuch, employees, customers, and the general public understand that staff compensation changes must be made in those sectors.

However, there exists four entirely different classes of employer making changes during this pandemic.

First, we see the greedy employer. These firms hold comfortable retained earnings far in excess and able to withstand short-term and medium-term external shocks, like Covid-19. Yet, they decide to lay off employees or wield their slashing scythe and reduce wages yet still expect the same worker output.

Second, we notice the bait-and-switch employer. These organisations lay off staff and reduce salaries on remaining workers even before any economic hardships hit. They utilise the public health emergency as an excuse to save money on their labour bill.

Third, we observe the shifter employer. Such companies decide to use a global crisis as a way to settle scores, restructure staff, or get in different workers.

Fourth, we witness the caring employer. These empathetic organisations go out of their way to reduce harm and uncertainty on their staff during crisis. They utilise some of their reserves, they make decisions based on actual data, and are transparent with their workers.

This generation of workers will remember these different types of employers for decades because of one thing: motivations matter. Yes, a firm which suffered only minor sales declines during the crisis could save a lot of money by laying off or reducing salaries during the crisis. But employees and the public will remember those organisations who stood by their workers and those who did not. Employer motivations become clearer and clearer over time. A 10 percent drop in revenues, as an example, will often not justify a 50 percent decline in salaries yet requiring workers to still produce the same output.

Employees will not forget or forgive companies who cut salaries during the Covid-19 pandemic even before there were direct effects to do so. Then once sales stabilise as the economy evens out, if revenues even declined at all, then employees will have to plead and beg for a return to their original salaries. The firms will likely make them feel grateful even though they were being taken advantage of by the employer.

Research by Roger Mayer and James Davis shows that workers crave benevolence and integrity in their employers. Legitimate business crises do happen and usually the workforce proves understanding and even generous. But when employers fake organisation crises to obtain labour concessions, the long-term effects often stay with the company for many years hampering profits and productivity. Do you lead the first, second, third, or fourth type of company listed above? What might be the long-term employee and public relations consequences if you fail your employees with low benevolence and questionable integrity during this Covid-19 crisis?