A reaction to the Wage Inflation Survey conducted by the Malta Employer’s Association by Julian Azzopardi.

Whenever wages and productivity are put in the same sentence it is bound to generate interest, discord, antagonism and even resentment at times.

There is no doubt that this is a hot potato and given the context within which the survey was conducted is also topical, but could also be time-bound.

What do I mean by this?

As humans we tend to react given the current state we are in. So if our state is influenced by externalities, such as inflation, economic stagnation, infrastructural inefficiencies, climate change, etc then our responses are going to be influenced by this.

I am not saying that these responses are ‘heat of the moment’ responses, but we do not know all the underlying influencing factors for these results. I do not know what questions were asked as only a sample were reproduced in the presentation and its news coverage.

Some may say that the interpretation is simple enough: Higher wages plus lower productivity equals a bad deal. I understand that view. And this leads to my next provocation.

Wage increases are a very bad way to measure or benchmark or even instigate increased productivity. It is known that the lasting effect of a wage increase in productivity, motivation in employees is as short lived as six months, after which the initial burst of increased commitment to the organisation will start to wane and be overtaken by things like food menu in the canteen, AC temperature in shared offices, power cuts, traffic, customer complaints, etc. Everything has a shelf-life and wage increases are no different unfortunately.

Are there better ways to stimulate productivity?

Is it right to expect increased productivity at the same rate of wage increases?

I say this as both an employer and an employee, so I’m hardly taking sides here.

The questions I would myself would be:

  • Were expectations for increased productivity part of the wage increase
  • Are these wage increases due to new hires, with higher salaries for the same job?
  • Have internal conditions changed as well as external ones?
  • What is the mood inside the organisation?

Is all the above relevant?

Well the survey goes on to mention that the second and third placed reason for employee churn is work flexibility and career progression. My point is, I do not think we can take these in isolation, all the while keeping in mind what is currently being said by employers as an important issue that needs addressing at the fundamental level within an organisation.

It is obvious that organisations cannot keep on taking increases (whether wage or cost of production/sales) without a return that makes business sense. The article mentions the call for ‘a holistic national vision […] to re-engineer our economy’ which I will not dispute. But that is beyond the immediate control of the business respondents.

What can businesses do?

What is it that businesses can do to mitigate, anticipate and avoid churn, the impact of wage increases, while keeping productivity to healthy levels?

This is what my thoughts are on this (and they are in no way finite and need to be applied contextually to the readers’ reality):

  • Revisit your organisation’s purpose or raison d’etre that employees would stick to irrespective of wage? Everyone one works to fulfil an objective, how can the reason why people come to work for you (as an employer) be sticky enough for people to do so because it aligns with their personal, professional ambitions?
  • Check your organisation culture. Remember people shape culture, and culture shapes people. If you as a leader are in a foul mood then this will influence your people significantly. Everyone is looking at you. If you are seen leaving work early or speaking to peers in a certain way, it is going to influence how employees connect (or disconnect) with the environment. And as much as it hurts, people leave people, not the job.
  • Promote a sound Human Relationships role in your organisation. Traditional views on human resources is no longer applicable. Organisations need people who promote human relations to build bonds and uncover inefficiencies. HR is no longer about filing applications and implementing policy. It’s about building trust.
  • Ensure your people’s wellness is top priority. There are 8 levels of wellness and financial wellness is only one. Engagement will help keep on top of how your people feel in all areas, however it needs to be done with purpose, by design and with intent and cannot be a mere check-list exercise.
  • Ensure the opportunity for learning and development is clear within the organisation. People always want to get better and feel better as they progress in their careers. Whether it is through promotions or recognition is up to the organisation to decide, but both are essential. Training, coaching, on-the-job mentoring, all should lead to an improvement in their career, not just for personal development, otherwise the effect may be the reverse.
  • Accountability. One of the hardest things to implement, because it’s about calling people out when they stumble. However, if implemented well can give status, clarity, autonomy, build deeper connection and lead to a sense of equity and equality. Because EVERYONE should be held accountable, not just our employees.

If you’d like a tailored set of suggestions for your organisation’s specific needs, feel free to book 30 minutes of my time for a conversation.