Impact of the Economy on Employee Morale

The success that a company enjoys is in large part based on the work of their employees. It is believed that employees are at their most productive when their attitude toward their job is high. The current financial crisis has lead to budget cuts and layoffs within many companies. Considering how the economic environment has changed the business environment leads one to ask is the financial crisis having an impact on employee morale? The following review states that with increasing workloads, decreasing benefits, and job uncertainty more and more employees are experiencing record levels of low morale. The review also addresses, that given the economic uncertainty, it is time for organizations to refocus on employee morale and communication between management and employees. The literature suggests that for a business to remain successful through the current financial crisis attention must be paid to increasing employee morale thereby, increasing productivity and efficiency.

Impact of the Economy on Employee Morale

The economic environment today is one filled with uncertainty and fear for both employers and employees. Employees are becoming increasingly discontent with their current positions and employers. While organizations today are facing more budget cuts while trying to maintain profitability, Haden and Cook (2012) state that “A lackluster economy should not give organizational leaders a ‘free pass’ to ignore morale issues” (p. 96). Considering the current environment the question can be asked, “In what way is the economic environment impacting the morale and attitudes of employees?”

Listed below is a review of literature that addresses the morale and attitudes of employees in light of the current economic crisis. Items of interest that are addressed in the literature is the lack of communication from the employer, the increased demands placed on employees, and the lack of respect that employees feel they receive. The review indicates that all of the items play a role in the decline of employee morale.

Review of Related Literature

As organizations have struggled to survive, it has become necessary to make changes in how they operate. Employees are frequently expected to “have to do more with less and morale can suffer. This puts tremendous pressure on employees at every level” (“Building Morale,” 2002, p. 47). According to Haden and Cooke (2012) “Such changes typically have a detrimental effect on employee morale” (p. 96). In