October 3, 2022

Drivers of employee well-being in times of crisis

How would you feel if I told you that by the end of 2020 working hour losses were roughly four times greater than during the Great Recession in 2009?

Work and Well-being during COVID-19: Impact,  Inequalities, Resilience,  and the Future of Work. Lessons learned from the World Happiness Report 2020 (Chapter 7)

How would you feel if I told you that global growth is estimated to have reduced more than 4% in 2020? How about if I tell you that by the end of 2020 working hour losses were roughly four times greater than during the Great Recession in 2009. We can now all put in perspective the magnitude of COVID-19 impact. Many people have lost their jobs, their businesses and even large proportions of people that remained employed have seen their working hours reduced. This is a 17.3% decline in working hours, an equivalent of 495 million full-time jobs lost. It set the scene for what will be potentially one of the greatest workplace transformations.  

COVID-19 had and will continue to have a significant impact on well-being and happiness at work. Even before the pandemic, the percentage of full-time employees engaged at work, meaning highly involved in and enthusiastic about their work and workplace was just 15%. As we’ve all been forced to go remote in a short amount of time with most companies and leaders not being prepared for it, engagement and overall well-being at work have been greatly impacted. The consequences of this pandemic on the workforce will continue to unfold over the years to come.

Initial data regarding how employees have been feeling about workplace well-being gathered  by Indeed from December 2019 until June 2020 allows us to get an initial understanding by seeing the movements across the below eleven drivers:

  1. Achievement
  2. Purpose
  3. Learning
  4. Flexibility
  5. Fair pay
  6. Management
  7. Support
  8. Appreciation
  9. Trust
  10. Belonging
  11. Inclusivity
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Figure 1: Movements in the drivers of happiness at work before and after the start of COVID-19 in the US (monthly). World Happiness Report 2021

While all of the above eleven drivers are related to happiness, I can observe two very clear trends that organizations should pay attention to:

  • Drivers of workplace happiness such as achievement, purpose, and learning at work appear to have declined in importance. As the report points out this could mean that employees have come to value their work for more fundamental reasons during the pandemic and may simply be happy to have a reliable source of income. My interpretation is that these drivers lost importance in the face of a drastic increase in workload while being exposed to additional workplace stressors and health risks. In my opinion, it’s critical that organizations and leaders put the right focus on achievement, purpose and learning at work, three of the main drivers of satisfaction at work.
  • Drivers such as belonging, flexibility and manager have all increased during the pandemic. These three drivers go hand in hand, and as more flexibility becomes available the more people need to feel like they belong and the more support is needed from managers. Past research suggests that the more employees work from home, the more likely they are to depend on their supervisors’ frequent contact. This might sound contrary to flexibility, hence the difficulty to balance both flexibility and a sense of belonging. Since the start of the crisis, many workers have reported feeling unprepared to fulfill their responsibilities, putting even more importance on the need for good communication between managers and employees. Gallup research shows that managers are responsible for at least 70% of the variance in their employees’ engagement. Never before was it more important that managers focus on linking employees’ roles to their organization’s wider purpose while helping them fully maximize their potential.

Being an employee myself this is how I see flexibility and belonging interacting without deliberate action:

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Figure 2: Flexibility and belonging natural trend. Happiness Digger, 2021

Organizations, leaders and employees have now a crucial job: to balance out the need for flexibility with the need for belonging. While the organization and the employees themselves are crucial actors in this balancing act, the drivers are the leaders who will now be required to make sure flexibility and belonging look a bit more like the figure below:

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Figure 3: Flexibility and belonging modified trend. Happiness Digger, 2021

Another crucial aspect to be considered, overall for companies that move into a hybrid mode or fully remote it’s maintaining the flexibility of working from home while still enabling employees and companies to build and sustain their social and intellectual capital. We must keep in mind that successful organizations run on social capital. Social capital refers to the connections between individuals and entities that can be economically valuable. These connections or social networks include people who trust and assist each other in order to achieve a common goal. Social capital leads to an increase in intellectual capital and as a consequence the organizational advantage is achieved. Therefore the shift must consider how to avoid diminishing social and intellectual capital while giving the employees the required flexibility. Social and intellectual capital increase thanks to new in-flows of people, different places and ideas, shared experiences with co-workers and unplanned social interactions that broaden one’s thinking.

Building meaningful relationships with colleagues and management is critical to job and life satisfaction. Work itself represents more than a paycheck – it is a large part of many people’s identity. Prior research suggests that when somebody loses their job, half of the negative impact on well-being stems not from the loss of income but from the loss of social ties, identity, and routine that come with a job. While past research has found some clear benefits in productivity for home workers, they also found that they are more likely to be overlooked for promotion—a clear indication of the need to build social capital with colleagues.

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Figure 4: Social capital intellectual capital and the organizational advantage

Organizations must design a new and flexible model. This model will still give employees opportunities to network, collaborate, and socialize in-person to provide the necessary in-flows of social and intellectual capital and lead to large productivity dividends while still providing flexibility. How this model will look like is the biggest question for organizations in 2021.

Workplace happiness did not start to decline instantly back in March/April 2020 and definitely didn’t affect everyone equally. Interestingly enough, the lowest point of the year was later in the year, once employees’ resilience began to diminish. Resilience understood as the ability to “bounce back”, to adapt well in the face of adversity, trauma, tragedy, threats, or significant sources of stress,  have been one of the areas of focus for organizations globally in 2020. Nevertheless, despite the efforts, happiness levels continued to decrease in autumn and winter and have still not recovered. In one of my previous articles, I discussed the effects of the COVID-19 pandemic on mental health which are large, negative and remarkably consistent. Despite its negative consequences, the global scale of the issue has pushed mental health high on policymakers and researchers’ agenda focusing on key factors such as loneliness, social isolation and social support. We have proven yet again the resilience that we can manifest in situations of such magnitude while removing some of the stigma associated with mental health.

Another evident consequence of the crisis is the increase of existing socio-economic inequalities. COVID-19 affected the labour market almost universally, but unequally distributed depending on country, income, gender, age, and type of work. Since March 2020, workers in lower-middle-income countries have experienced a 43 percent larger reduction in working hours and labour income than in high-income countries. Informal sector workers, who make up a big portion of the labour force in developing countries, have been particularly at risk.6 billion informal sector workers have seen their hours decrease since the start of the pandemic.

In low-income countries, the approximate drop in earnings is 86 percent. Employees in developing countries are generally much less likely to work remotely, and therefore at higher risk of losing their jobs and contracting the disease in their normal work environments. Many governments in low-income countries have also been financially incapable of providing employees with sufficient economic relief. As of October 2020, announced fiscal stimulus packages in low-income countries amount to only 13 percent of what would be required to offset the total loss in working hours. These trends contribute to increased labour market instability in many of the world’s most vulnerable regions.

In almost every European country, low-income and low-skill workers were more likely to have reduced their working hours or lost their jobs in the early phases of the pandemic. Even in Europe, we see enormous differences. By the end of June 2020, GDP growth had decreased by 22 percent in Spain and the United Kingdom relative to the year before. This figure was less than 5 percent in Finland, and Norway, similar to South Korea, one of the countries that best dealt with COVID.

There are also differences depending on age and gender. Young people are facing multiple social and economic shocks resulting from the COVID-19 crisis. Young women, in particular, make up more than half of youth employment in food and accommodation. Single parents are particularly at risk, of whom almost four out of five around the world are women. Single mothers were also much more likely to be socioeconomically disadvantaged before the pandemic began.

Looking specifically at the people that have stopped working, this had a negative impact on life satisfaction, regardless of furlough status or income losses. Even for workers who suffered no income losses due to being furloughed, their life satisfaction declined. This clearly highlights that the relationship between work and well-being extends beyond pay contradicting the economic theory, which understands the relationship between employment and welfare exclusively in terms of financial compensation. From this perspective, employees who stopped working without any lost income should not only have experienced no decline in welfare but actually experienced a welfare gain. However, the research conducted during 2020 did not reach that conclusion. Therefore, this highlights the fact that organizations need to balance pay and the eleven workplace well-being drivers mentioned above in order to attract and retain talent.

One of the most robust and well-documented findings in the economics of subjective well-being is that unemployed people are significantly less happy than the employed. On average, the life satisfaction of employed respondents is 6.4 on a scale from 0 to 10, while the life satisfaction of unemployed respondents is markedly lower at 5.2. When employed, men and women have very similar levels of life satisfaction. However, unemployment appears to decrease men’s happiness more than women.

Lastly, both men and women with children have generally reported higher levels of life satisfaction than non-parents during 2020. The report concludes that having children in the household is a way to mitigate the negative impact of inactivity on life satisfaction. Spending more time with the kids that it’s usually not possible is seen as a positive influence on overall life satisfaction. Without disregarding the joy that spending time with kids has brought to many parents, I can say without a doubt, having children in the house has also become an added challenge to balancing the new routines while working at home full time. Therefore, I am more inclined to go for a different interpretation of this finding which takes into account the pre-pandemic routines of these two groups. If we consider that non-parents usually have more active social lives with larger social networks which have all been suppressed during the pandemic, this could explain why non-parents levels of life satisfaction have decreased more than the levels of life satisfaction of those who are parents. The non-parents have lost the core of their lifestyle, therefore leading to a bigger drop in levels of satisfaction.

The pandemic leaves a lot to recover from, both economically and emotionally. A large percentage of the workforce has started working from home in 2020, many for the first time, while others have had their working hours reduced or even lost their jobs and businesses altogether. Therefore, it is crucial to understand how people have experienced this new world of work and we are yet to understand the effects and how they will shape the future of work.

As a consequence of the COVID-19 pandemic in the workplace, it is possible that some workers may begin to look for jobs that are more meaningful and that have strong social support networks, while others may begin to prioritize earnings and job security. We will have a long but complete transformation of the workplace in the years to come.

Written by Andreea Pap

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