Unhappy staff will cost companies dear

The majority of businesses that fail to recognise or deal with staff dissatisfaction will have to fend off legal actions and public relations disasters, according to researcher Gartner.

Gartner analysts point out that executives, particularly those in high-pressure technology and knowledge-based companies, need to understand the parallels between staff mistreatment and business disruption.

"Executives and managers who see their companies engaging in mistreatment of employees should raise a warning flag, and begin to quantify and qualify the risks to attracting staff, maintaining service and building a customer base," said Diane Tunick Morello, vice president and research director at Gartner.

Morello added that executives who ignore or play down the connection between staff mistreatment and business turmoil put their workers, customers, partners and shareholders at risk.

Gartner believes there are four people management behavioural patterns that companies must be wary of. First is the 'get rich quick' model, whereby staff are hired by venture capital-rich managers who promise an initial public offering within 12 months. In return for promised wealth, these employees are expected to work long hours and maintain a single-minded focus on company growth.

Gartner points out that possible problems include poor customer service, little enhancement or development of products and services, and loss of intellectual property as staff depart.

The second pattern, which Gartner calls 'pay to stay', involves companies continuously increasing staff salaries to make up for constant understaffing, a lack of investment in tools and archaic business thinking. Possible problems in this area include staff indifference to quality defects, service problems, high turnover, and lost suppliers and buyers.

In the next pattern, called 'fire drills', business managers jump into new markets with great ideas and much enthusiasm, but lack direction. They change priorities and measure success daily. Potential problems include failure to complete new initiatives, busted budgets, ballooning cost structures and the inability to improve or retire old products.

The final behaviour, called 'boxing in employees', happens when businesses forgo workforce effectiveness in exchange for operational efficiencies. Managers talk about personal development but when the individuals make a move to pursue these opportunities, they are denied or delayed until replacements are found.

Companies with this attitude can face unplanned reliance on contractors, high employee turnover, low morale and customer indifference.