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What Is Employee Relations: A Guide for HR Professionals

Many businesses expect their employees to be loyal, motivated and happy despite only paying lip service to morale. However, the facts show that a real focus on employee satisfaction is one of the biggest factors separating Fortune 100 companies from the rest. More than 80% of employees at these elite companies report high levels of workplace satisfaction, compared to less than 50% of the general population. If you want to attract the best talent and get the most from your workforce, you need to start emphasizing employee relations. Of course, all this begs the question; just what is employee relations?

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What is employee relations?

Employee relations is the field of creating, managing, and maintaining a positive connection between management and the workforce. It emphasizes a mixture of individual, team-level and collective, company-wide policies and practices to address employee problems and improve overall morale.

Definition of employment relationship

One definition of the employment relationship comes from the International Labour Organization:

“The employment relationship is the legal link between employers and employees. It exists when a person performs work or services under certain conditions in return for remuneration.”

While it describes the basic dynamic, there’s much more to an employment relationship than a contract. People put countless hours of their lives into a career, and the work itself is only one component. Culture, teamwork, social interaction and other elements of the workplace are major factors in a person’s work and life. When people are unhappy at their job, factors such as payment and the work itself often fade to the background. Shifting from a narrow definition of the employment relationship to a more broad, inclusive employee relations strategy is necessary to make your company more successful.

What is employee relations’ importance?

Some managers who’ve been away from the rank and file too long may wonder what is employee relations’ importance. After all, does it matter if the workforce is happy as long as they’re getting their work done?

Actually, workers and empirical results are in clear agreement that employee satisfaction is extremely valuable. A good HR employee relations policy and a culture that affirms and values the worker provide numerous benefits in terms of turnover, performance and overall efficiency.

The benefits of good employee relations

Improving employee relations provides a mixture of concrete and intangible benefits. On one hand, increasing the morale and job satisfaction of the workforce positively affects factors such as turnover, which reduces training costs and workplace disruptions. However, satisfied employees are also less prone to conflict and are more willing to go above and beyond for their employer. In all, high employee morale is a powerful asset that will help you grow your business.

Reduce turnover

High employee turnover isn’t just an inconvenience, it’s extremely expensive and can easily become fatal to any business. According to several studies cited by Forbes, just hiring a qualified candidate can cost one-third of their annual salary. This is an aggregate of numerous expenses, such as advertising, recruiter fees and the labor hours you invest in interviewing candidates. While a third of an employee’s salary is a hefty cost, it doesn’t even come close to the true cost of turnover, which lies in lost productivity.

Replacing an information worker can often take six weeks or more, and while they’re gone, no work is done. This shortfall doesn’t come to an end when a new employee begins working for you, either. It usually takes one to two months for a new hire to reach full productivity. As a result, turnover in an office easily causes the loss of up to a quarter of the revenue an employee brings in. Combining recruiting fees, lost productivity, and the burdens of hiring, turnover can result in a loss greater than your ex-employee’s annual salary.

While the reasons employees quit are complex and nuanced, job satisfaction is a large component. One study shows that nine in 10 people would accept less pay if they felt their work was more meaningful. People don’t just want money; they crave accomplishment and appreciation. This highlights the potential of employee relations as a powerful bulwark against turnover.

Foster loyalty

It’s common to bemoan the lack of company loyalty from the new generation of workers, but managers who want to overcome this need to be honest and cast their gaze inward. If millennials themselves are the cause, then the problem is unsolvable. However, a lack of loyalty isn’t some inherent quality of the younger generation; it’s the result of performing unappreciated, unsatisfying work with little opportunity for growth. If your company gives employees a reason to be loyal, then they will be. And employee loyalty is a valuable quality that’s worth fostering, for reasons as diverse as reduced turnover and more employee referrals.

Even if your company offers excellent compensation, a worker who lacks loyalty won’t see the position as anything more than a job. They’ll never pull extra hours when they’re not required to, and they’ll unconditionally put other parts of their life before work. It’s a far cry from the performance you can get from an employee who’s motivated and truly wants to work with your company.

Building employee loyalty is the only way to earn the exemplary performance that lies behind every report of high productivity. Of course, you can require employees to work overtime and try to force them to go above and beyond. It’s not advisable, though, as this sort of management without leadership destroys morale, encourages turnover and won’t get you the results you’re looking for.

Strengthen workplace bonds and company culture

Unhappy people are more conflict-prone, less willing to compromise and not inclined toward effective teamwork. Good, efficient work is never a matter of just coming in and doing what your contract requires of you; it takes a cooperative spirit and open-mindedness. When your workers don’t want to be here, subtle unnoticed conflicts and arguments become a sort of friction that reduces efficiency. Working to improve employee relations is one of the only ways to reduce these relatively intangible obstacles to smooth business operations.

Reduce costs and increase productivity

Engaged, satisfied employees work harder and are a lower turnover risk. One hour of work from an employee who’s happy with what they’re doing is worth more than an hour from someone who can’t wait to clock out. Furthermore, a motivated employee is willing to go further and make certain sacrifices when they love working for a company. Each employee becomes an ambassador for your company, which can help you overcome hiring challenges more easily.

All of this adds up to lower costs, higher productivity and a more successful business. Investing time and effort in employee relations isn’t just about making work more pleasant, it’s a correct business decision.

How to improve employee relations

Once you understand exactly what employee relations is, the next step is working to strengthen them. There are numerous ways to build healthy employee relations, and they start with committing to a vision for your company culture. You might begin incorporating interview questions that reflect your company values as a means of creating the environment you want your company to have.

However, such broad measures can’t comprise the entirety of your employee relations strategy. While collective, cultural measures such as tackling bias are important, individual workers are at different stages of their own journey within your company and have varying needs.

For instance, new hires and older employees often have different needs and interests. You can change a new employee’s future outlook on the job by bringing them onto the team with enthusiasm and energy. Current employees can feel more satisfied and do better work for your company if you provide opportunities for growth and career development.

Change your outlook on the workforce

It’s not enough to implement a few new policies and call it a day. Rather, you’ll get the best results in managing employee relations if you genuinely prioritize the happiness and satisfaction of your workforce. By seeking out the problems that afflict your employees and working to resolve them, you’ll be able to improve employee satisfaction and morale.

Encourage enthusiasm

Few people lack enthusiasm and excitement when they land a new job. The quickest way to stifle this is with mountains of paperwork and a bored, disinterested introduction to work. You should seek to capitalize on the optimism of new hires by providing an engaging, energetic and streamlined onboarding process.

Praise and reward good performance

Making people feel appreciated and seen by their managers and leaders has a profound impact on their job satisfaction. When an employee reaches an important milestone, achieves a high level of performance or otherwise contributes to the success of your company, it’s important to recognize the accomplishment. A verbal acknowledgement or a handwritten letter of recognition doesn’t cost anything, but it can have a substantial effect on employee relations. You should also consider material rewards, such as bonuses or paid time off, for particularly noteworthy achievements.

Increase communication and leadership visibility

In many businesses, there’s little communication and visibility between the rank and file and leadership. When people feel as though they don’t know who they’re working for, it can be alienating and contribute to a sense that their work lacks meaning. To avoid this, it’s important to create a rapport across lines of authority and convey that leadership cares about the average employee.

Help your employees so they can help you

One of the most valuable factors in making employees feel happy in a job is providing opportunities for growth. When an employee feels as though they’ve reached a dead end, it can destroy their motivation and make work feel unbearable. Growth can be opportunities to rise to new positions within the company. The challenge is that only so many higher positions are available, and you can’t promote everyone. However, you can offer training and opportunities to develop new skills within your company.

While some managers are afraid that by training employees they’re preparing the worker to leave, this thinking is short-sighted. By trapping a growth-minded person in a stagnant position, you’ll only drive them away faster. When you help employees grow, sometimes you do prepare them to move on, but it’s not a zero-sum game. Their new skills and motivation can empower them to do better work during their time with your company, which will probably be longer than it would have been otherwise.

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