Just the announcement of austerity policies leads to an overall drop in employee satisfaction, engagement and wellbeing even before cuts are made, according to new research.

Professor Tina Kiefer, from Warwick Business School, completed a study of study of public sector employees around the UK Government’s 2010 Comprehensive Spending Review (CSR) announcement, when Chancellor George Osborne revealed a budget reduction of 19 percent over four years to a host of Government departments.

She found that there was an immediate drop in satisfaction levels, which increased with the amount of changes that were announced over six months unless those changes included innovative solutions over salami-slicing.

Professor Kiefer said:

“The announcement had a clear short-term impact, while the organisational changes themselves affected employee well-being, attitudes and behaviour over the longer term.

“Not many would have expected the actual announcement, rather than the subsequent changes, to affect public service employees in this way. But an announcement about cuts is an event with ‘real’ impact that signals potential changes to employees’ jobs and career prospects. It also hit home the scale of change, which may have confirmed – or been worse than – employees’ expectations.

“Our results highlight the importance of understanding employee reactions to nationally instigated policies, rather than merely focusing on what happens within an organisation when organisational changes are implemented.”

But the study found that not all the changes had negative effects on staff. When the CSR led to cuts in resources and numbers workers’ well-being, job satisfaction and engagement dipped, but when innovative new practices were introduced to deal with the reduction in budget the researchers found a positive impact on morale and engagement.

Professor Kiefer said: “This result has really surprised us. Our results demonstrate that ongoing change can have positive outcomes for employees, if such changes introduce procedures and processes that are novel to the organisation, both with respect to internal processes and serving the public.





Steff joined the HRreview editorial team in November 2014. A former event coordinator and manager, Steff has spent several years working in online journalism. She is a graduate of Middlessex University with a BA in Television Production and will complete a Master's degree in Journalism from the University of Westminster in the summer of 2015.