In an increasingly uncertain world, here’s how leaders can focus on workers’ psychological needs

Originally featured in The Globe and Mail.

There’s an atmosphere of collective angst over the uncertainty of the future.

Revealing the sources of the trepidation is the “What Worries the World” survey by global market research firm Ipsos, which tracks public opinion on the most important social and political issues across 27 countries. The top concerns of the May 2022 list include inflation; poverty; and social inequality and unemployment.

In his national bestselling book, The Next Age of Uncertainty, former governor of the Bank of Canada Stephen Poloz forecasts that five tectonic forces – population aging, technological progress, growing inequality, rising debt and climate change – and their collisions with each other will result in an increasingly unpredictable future.

While there have always been uncertainties in the past, Mr. Poloz believes that the future will be even more volatile. “Some of those forces [outlined in the book] have been relatively tranquil for long periods of time,” he said in an interview. “We’re entering a phase now where there are large movements for at least three, and probably all five, of those forces.”

Managing this growing complexity and risk will require leaders to double down their focus on people, as the uncertainties highlighted by the Ipsos survey and The Next Age of Uncertainty have direct impacts on workers. “You can’t have a successful business without reassured employees,” said Mr. Poloz. “It’s important for leaders to manage the risks within their control and shoulder some of the burden for their employees.”

What this looks like tactically will depend on the context, but there should be an underlying emphasis on meeting employees’ psychological needs. Doing so counterbalances the growing uncertainty of the future with stability at work, which ultimately enhances employees’ lives outside of work through a positive spillover effect. This process occurs when benefits in one life domain transfer into another, such as between work and at home.

Decades of scientific research point to three universal, psychological needs that form the bedrock of human motivation: autonomy, the need to be the authors of our actions; competence, the need to feel effective and experience growth; and relatedness, the need to belong.

Employees are more satisfied with their job, perform better and have greater overall life satisfaction when these needs are met in the workplace. Failing to meet these needs leads to burnout and destructive workplace behaviour such as knowledge theft – which occurs when employees deliberately take credit for someone else’s contributions.

When viewed through this psychological lens, there is a deeper and more nuanced perspective of why employees want what they want. Unfortunately, business leaders are not aware of these needs.

Research by McKinsey & Co. surveyed employers and employees spanning multiple countries and industries on the great resignation. Among the top reasons for employees quitting were a lack of a flexible work schedule, potential for advancement, and a sense of belonging – reasons that employers did not think contributed to their people quitting.

A closer look reveals that each motive corresponds directly with a psychological need. Flexible work is about autonomy over one’s work schedule; career advancement recognizes one’s competence in role; and belonging at work fosters relatedness with colleagues.

With this framework in mind, here are some considerations for organizational leaders:

(Re)evaluate your compensation models: If it took a global pandemic to realize your people are valuable and worth more to you than what you’ve been paying them, now is your opportunity to do something about it. Money in itself is not everything, but what it does provide at a psychological level is a means through which individuals can exercise personal agency and be recognized for their contributions at work. In other words, money can facilitate psychological needs. Compensation in recognition of competence is especially important among workers who have been loyal to you during the great resignation – recent figures show that job switchers are paid on average 7 per cent more than those who have not quit on their organizations.

Develop your people: Workers believe organizations have an obligation to provide them with opportunities for development over the span of their tenure – meeting these expectations satisfies employees’ need to feel competent at work. Yet more often than not, the ones who receive the most development are also the ones who arguably need it the least, a phenomenon termed the leadership development paradox. An emphasis on development is particularly important in the context of reskilling and upskilling: the World Economic Forum’s 2020 Future of Jobs Report estimates automation and technological advancements will displace 85 million jobs by 2025, but also create 97 million new ones.

“The problem with job disruption is less severe than it sounds,” Mr. Poloz said. “But there is a strong incentive for companies to upskill and reskill their employees because there will actually be a shortage of workers in most countries.” Organizations that have employees with fresh and nimble skills not only fulfill their duty to develop their people, but will futureproof themselves by facilitating internal mobility and retaining their people.

Expect compromises with hybrid work: Hybrid work has unintentionally pitted employees’ psychological needs against each other. On the one hand, remote work has demonstrated that employees can be competent away from the office, and so a hybrid arrangement allows employees to exercise autonomy over how, when and where they work. On the other hand, virtual workers find it difficult to form friendships at work and feel more isolated from their organizations. Without such relational glue holding people together, it’s no surprise workers find it easier to quit. The way forward will require compromises in some form, but an awareness of these psychological needs highlights why hybrid work leads to competing priorities among employees, and between employees and organizations.