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Workers' Engagement Levels Drop, Along with Their Expectations 
Sidebar: Benefits Budgets Hit Hard by Economy 

9/28/2009  By Stephen Miller 
 
 

Cost-cutting actions made by U.S. employers in 2009 to deal with the economic downturn have contributed to a sharp decline in the morale and commitment of their workers, especially top performers, according to an annual survey by consultancy Watson Wyatt and WorldatWork, an association of HR professionals.

The 2009/2010 U.S. Strategic Rewards Survey found that employee engagement levels among all employers dropped 9 percent since 2008 and have plunged close to 25 percent among top performers. Additionally, 36 percent of top performers say their employer’s situation worsened over the past year; the number who would recommend others take jobs at their company has declined by nearly 20 percent.

The survey was conducted in May 2009 and is based on responses from 1,300 full-time workers at large U.S. employers.

Disengagement: Percentage of top-performing employees who say they:

 

Believe that pay and benefits changes made by their employer in the past year have had a negative effect on work quality and customer service

41%

Are less confident in management’s ability to grow the business

29%

Are less likely to be satisfied with advancement opportunities at their company

26%

Are less likely to want to remain with their company vs. take a job elsewhere

14%

Source: Watson Wyatt and WorldatWork

“The fallout from the actions employers have taken in response to the recession is now coming to light, and it is significant,” says Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. “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.”

Lowered Rewards Expectations

The survey found that most top-performing employees say they aren’t expecting to receive the same bonus or pay increase as they have in the past, even though historically companies have rewarded them with pay commensurate with their performance.

Pay and Performance: Percentage of top-performing employees who say:

 

Their company has reduced or suspended bonuses compared with 2008

61%

Individual performance expectations have increased

43%

Their employer rewards top employees for performance

35%

Their company’s financial performance goals have increased

32%

Source: Watson Wyatt and WorldatWork

“One of the many challenges employers will face as the economy recovers is how to re-engage employees, and especially top performers,” says Ryan Johnson, vice president of research at WorldatWork. “Taking a total rewards approach and looking at all of the ways companies can motivate and retain—including compensation, benefits, work/life initiatives and career development—is going to be essential.”

Other findings from the survey include:

Regardless of whether companies downsized, 89 percent of employers report taking at least one or two actions to minimize the extent of workforce downsizing. On average, survey participants report taking 3.5 different actions.

Nearly three out of four employers (72 percent) have gone through a restructuring or conducted layoffs since the economic downturn began last year.

 

Benefits Budgets Hit Hard by Economy

About one-third of U.S. companies maintained their 2008 budget levels in 2009, while another15 percent say their budgets decreased by an average of 16 percent over the previous year, according to a report by Prudential Financial Inc., A New Day in Employee Benefits.

Less than half of U.S. employers increased their benefits budgets in 2009, compared with increases by two-thirds of employers in the prior two years, according to the survey, fielded in April and May of 2009.

According to the report, trends shaping the employee benefits landscape include:

Companies are altering their expectations regarding benefits staffing levels. Those affected most by the recession are forecasting a downsizing of their benefits staff over the next five years.

Cost cutting measures are impacting strategic initiatives such as improving employee education and advice.

Using Internet technology to increase efficiency and control benefits costs will be important objectives.

“The good news is that a majority of plan sponsors and brokers have a positive outlook for 2010,” said Lori High, president of Prudential’s group insurance business. “Both plan sponsors and brokers expect their companies to be doing better financially a year from now.”

Stephen Miller is an online editor/manager for SHRM.

Related Articles:

Laid Off Yesterday, Rehired Tomorrow: What About Benefits?, SHRM Legal Report, September-October 2009

Compensation 2010: Answers to Tough Planning Questions, SHRM Online Compensation Discipline, September 2009

Avoiding 'Pain for Performance': How to Effectively Design and Implement a Pay-for-Performance System, SHRM Online Benefits Discipline, September 2009

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