Here’s a new survey that is worth noting but that will not surprise any manager or executive who has a pulse: The deep cost-cutting that so many employers have been making to deal with the current economic crisis have “contributed to a sharp decline in the morale and commitment of their workers, especially top performers, according to an annual survey by Watson Wyatt, a leading global consulting firm, and WorldatWork, an international association of human resource professionals.”
Yes, if you have been managing and awake at all during this Big, Bad Recession, you know that A) organizations have been slashing budgets and cutting costs in order to survive; and, B) that such large-scale cost cutting tends to have a highly negative impact on the most critical part of your organization—your workforce.
According to the 2009/2010 U.S. Strategic Rewards Survey, “employee engagement levels for all workers at the companies surveyed have dropped 9 percent since last year and close to 25 percent for top performers. Additionally, 36 percent of top performers say their employer’s situation has worsened in the past 12 months and the number who would recommend others take jobs at their company has declined by nearly 20 percent. Compared with last year, top-performing employees are 26 percent less likely to be satisfied with advancement opportunities at their company. They are also 14 percent less likely to want to remain with their company versus take a job elsewhere.”
In addition, the survey found that “high-performing employees are 29 percent less confident in management’s ability to grow the business. And 41 percent believe that pay and benefit changes made by their employer in the past year have had a negative effect on work quality and customer service.”
“The fallout from the actions employers have taken in response to the recession is now coming to light, and it is significant,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, in what seems like a bit of an understatement. “Having less engaged and committed workers is a major concern for employers. This could have a long-lasting and detrimental impact on productivity, quality and customer service, as well as an increase in the risk of companies losing their best employees.”
From my perspective as editor of a publication that closely follows how organizations manage their workforce, this survey simply puts a spotlight on what many have seen for some time: that there is going to be a long-term impact on organizations due to the sometimes cavalier, sometimes ham-fisted and often less-than-skillful ways that some businesses have chosen to cope with the worst economic downturn in 75 years.
I’ve argued recently that businesses everywhere need to truly engage workers and help them get past the bad feelings that so many have about their organizations and their jobs. With a possible economic recovery on the horizon, it is time for America’s business leaders to step up and start helping America’s workforce out of its funk.
The Watson Wyatt/WorldatWork Strategic Rewards Survey should be a wake-up call for all employers that there will be fallout from all that has happened during this downturn long after we are back in a strong recovery mode. And as bad as the results of this survey are, here’s something to keep in mind: The survey was conducted in May, more than three months ago. My guess is that these survey results would be much, much worse had they been taken in July or August—and if you’re a manager, that’s a scary prospect to contemplate.
Given all of that, you also shouldn’t be surprised at this: Your employer-sponsored benefit packages next year are going to hit you with more out-of-pocket expenses, a bigger push for wellness, fewer choices and options, and tighter cost controls.
• Higher out-of-pocket costs. More than four in 10 employers in a recent Watson Wyatt survey said they will raise deductibles, co-payments and out-of-pocket maximums due to the economic crisis. Some employers might raise doctor visit co-payments by $5. Others might no longer provide 100 percent coverage for in-network services, opting instead to introduce some level of co-insurance to encourage workers to be more aware of the cost of services. Deductibles for individual and family coverage are expected to increase by $50 to $100 or more among some employers.
• Greater use of incentives to stay healthy. Employers are continuing their push to improve the health of employees and their families. In addition to continuing the focus on wellness communication, employers are offering workers (and, in some cases, spouses) more incentives such as gift cards, cash and discounted premiums for undergoing a health risk assessment or participating in smoking cessation, weight management or fitness programs. They are also giving workers access to on-site health coaching as well as using health service providers to deliver Web-based and telephonic coaching.
• Consumer-directed health plans. More employers will offer CDHPs next year as they are increasingly viewed as an effective way to control rising costs. Those employers adopting new plans are generally adding a high-deductible plan, often with a health savings account. Most employers adding these plans will offer them as an option to workers rather than replacing their traditional health plans.
• Consolidation of health plan offerings. Some employers plan to reduce the number of health plan options they offer to workers. As more employers consolidate and change their health plans and networks for 2010, some employees might have to change physicians or pay higher out-of-network costs.
• Prescription drug benefits. Some workers will see changes to their prescription drug benefits in 2010. As part of an overall movement to CDHPs, a number of employers are introducing a CDHP prescription drug benefit option that typically offers workers 100 percent coverage on a list of preventive medications. Other companies are introducing value-based designs that include zero co-pays on certain prescription drug therapies that are known to help lower health costs and reduce hospitalizations.
• A closer eye on spousal and dependent coverage. Employers are increasingly revisiting spousal and dependent coverage in their efforts to control rising costs. Some employers are requiring spouses to complete health-risk assessments, while others are charging higher premiums for working spouses who have access to other health care coverage. More employers are also expected to audit their workers to eliminate dependents who are not eligible for coverage.
If anything is clear in all of this, it’s that the unrelenting double-digit increase in the cost of health care will continue to affect everyone—both employers and employees—no matter how you feel about the reform efforts coming out of Washington. And, it’s why the debate on the subject isn’t likely to be solved anytime soon.
I love holidays but always find that part of the price I pay for taking off is that a bunch of stuff has stacked up in the interim. So, here are a few interesting workforce odds and ends that you too might have missed while we were out celebrating Labor Day and the end of summer 2009:
The story discusses how Petco, the San Diego-based pet supply chain, adopted a three-page policy in November, modeled after what IBM is doing when it comes to employees and social media.
“Petco intranet manager Daniel Sundin said the policy bars blogging and using social media at the office unless required as part of an employee’s job,” the Union-Tribune story said. “The policy says employees are personally liable for what they write and are precluded, in part, from sharing sales numbers and proprietary information or using the company logo without permission.”
That sounds like a reasonable, level-headed workplace policy to me, but Petco’s intranet manager also made this point: “[A]lthough restrictions are needed … companies ignoring social media’s power miss the big picture. That’s just a head-in-the-sand thing,” Sundin added, “and you’re a dying company if you’re doing that.” Truer words have never been spoken.
And, here’s an observation from the Mercury News story that should frighten anyone who wonders what might happen if they get a pink slip.
“People don’t believe there’s a job out there for them anymore and they give up on themselves,” says Janice Shriver, a labor market consultant with the state’s Employment Development Department. “The long-term unemployed used to be people difficult to place because they were maybe ex-offenders, or homeless. Today it’s government workers and chemists and engineers.”
“As bad as the unemployment numbers are—10.7 percent in Florida—they don’t tell the whole story,” the Herald story says. “While hundreds of thousands of Floridians have lost their jobs because of the Great Recession, thousands more have taken big hits to their paychecks because of limited work hours or a shortage of jobs that use their skills. Economists call this underemployment, (and) the full extent of underemployment may be impossible to measure. But we do know this: In addition to the 9.7 percent of workers across the nation who were unemployed in August, another 5.8 percent were working part-time because they couldn’t find a full-time job. If those people were counted as unemployed, the jobless rate would be 15.5 percent.”
You know what I get really tired of? It’s the never-ending flow of stories that chronicle just how terrible this Big, Bad Recession is for America’s workforce.
Yes, things are bad, horribly bad, although there are some small but slightly encouraging signs that perhaps the badness of 2009 has bottomed out and that things will continue to be less bad in the months and years ahead.
“Even as the ranks of unemployed and underemployed have grown, career counselors, therapists and other experts say a certain segment [of the unemployed] is determined to suffer in silence, keeping details of job losses and financial pressure secret from all but close family and friends,” the Post story says. “The problem is particularly acute in affluent neighborhoods in the Washington region, experts say, where the self-worth of high-achieving professionals is deeply intertwined with their jobs. There might be 14 million unemployed people in this country, but in this town—with its A-types and status seekers—failure still is not an option.”
Although this story is focused on “high-achieving professionals” in the Washington, D.C., area who are out of work, I suspect that the feelings of loss and shame that the Post writes about are feelings that many unemployed around the country feel as well. Stories like this are more common in this recession, the newspaper story notes, “because the downturn has hit more middle-class and affluent families than usual.”
There’s a reason this story was the second most-read on www.washingtonpost.com: It’s because it resonates with such a broad cross section of people. Even if you’re not unemployed, you probably know someone who is and worry that it could still happen to you. Plus, people who still have jobs have also been affected in many different ways—with hiring and salary freezes, record-low pay increases (if you were one of the fortunate few to get a pay increase), furloughs and all other sorts of reductions and cutbacks.
And, here’s another scary tidbit: An Associated Press story I read today in a number of newspapers (here’s a version from the Denver Post) said that “some economists say unemployment may not return to healthy levels until 2013.” I don’t know about you, but I’ve been focused on things improving by late 2010 or sometime in 2011. Looking to 2013 for an employment recovery is the bleakest forecast for a rebound I’ve heard or seen anywhere.
The unemployed guy at the center of The Washington Post story—a former business development manager at an aerospace company—probably spoke for a lot of people when he said, “It’s a bad time to look for a job. There are far fewer jobs out there. A lot of families are suffering.”
He’s right, of course, and it just shows how the workforce repercussions coming out of the Big, Bad Recession will be long-lasting—especially if we’re not looking for a real employment recovery until 2013.
Here’s a sobering reminder of how things are going in this year of the Big, Bad Economic Downturn: More than 60 percent of the organizations recently surveyed by staffing services provider Veritude say they are “using the recession as an opportunity to replace poor performing employees,” given the abundance of candidates in the current job market.
The report, “The New Normal: Recession Response and Workforce Planning,” can be downloaded at Veritude’s Web site. It’s an interesting look into how HR and procurement professionals across America are dealing with the ongoing recession. The average company size in the survey was around 12,000 employees, and some of the other noteworthy findings include the following:
• Sixty-two percent of companies surveyed say they have laid off employees as a “direct response to the current economic climate.”
• Only 22 percent of the companies have turned to lowered wages as a response to the recession, while 18 percent have reduced benefits and 10 percent have resorted to furloughs.
• Nearly one-third of companies have implemented a variety of other responses, and these include hiring and salary freezes; spending restrictions (“particularly on travel and supplies”); increased scrutiny on contracts and getting more competitive bids; labor relations work; and re-evaluating relationships with partners.
But the survey also offered this ever-so-slight glimmer of hope: “[Although] layoffs and cost-cutting have been dramatic … for many companies that reactive stage has come to an end; they have pruned their expenses and employee base and are now looking to build the foundations of recovery.”
That doesn’t mean a huge increase in staff hiring, however.
The survey found that “the current recession has impacted the manner in which HR professionals operate, as 38 percent shared that their staffing models will not revert to what was used in the past. In fact, in seeking more flexibility in cutting staff when necessary, 33 percent of respondents are considering increased reliance on contingent staff” instead of permanent workers.
“This pronounced economic crisis has pushed many companies into analyzing and reshaping their staffing models. Our study indicated that while layoffs are a knee-jerk first response, to remain competitive it makes far more sense for companies to replace minimal achievers with higher achievers,” said Joe Collins, senior vice president of Veritude, in a press release accompanying the survey result.
The Veritude study is worth reading, especially if you want a realistic view of what has happened and just where things are going with the nation’s workforce. But it’s not light reading. It’s a sobering reminder of the how things are, without any sugar coating.
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