Enticing Employees

The recession has left its mark on top employees -- who are both disengaged from their current organization but hesitant about looking for employment elsewhere. In addition to revisiting leadership-development and reward-and-recognition programs, HR leaders should consider changing the organizational design.

By Tom Starner

Logic says that finding new talent in a post-recession world should be relatively easy. After all, with people losing jobs around the globe, the talent pool should be teeming with available, skilled workers just waiting to be hired.

Logic also says that cost-cutting measures during the worst global recession in decades was a fait accompli, a necessary evil that would, in the long term, benefit those who kept their jobs and the bottom line at the same time.

Unfortunately, logic isn't always in play when it comes to managing talent in a volatile business climate. And that is precisely the case, according to a recent survey jointly conducted by global professional services company Towers Watson and WorldatWork, an international association of human resource professionals.

Among other things, the Towers Watson Global Talent Management and Rewards Survey of 1,176 employers around the world (314 in the United States) found that a majority of non-U.S. employers are having a tough time attracting critical-skill (65 percent) and talented (61 percent) employees. In the United States, the percentages are 52 and 45 percent respectively.

At the same time, employers admit they are feeling negative pushback from employees who were spared pink slips, but remain staggered and disengaged due to increased workloads and other job-related stress caused by downsizings.

U.S. companies took the most aggressive measures in response to the recession, with more than 60 percent implementing at least four cost-cutting actions. Six in 10 (61 percent) employers believe their cost-cutting actions increased employees' workloads, while half (53 percent) said the measures adversely impacted the ability of employees to manage work-related stress.

One-half also said the measures had a negative impact on employee engagement and their workers' ability to balance work and personal lives.

Some experts believe this double-barreled whammy is not surprising, given that this recent -- and seemingly, ongoing -- recession is unlike others in recent history. And those same experts have advice for employers trying to figure out this conundrum in the wake of the economic crisis.

Most of all, they say, companies need to re-evaluate their reward-and talent-management programs, as well as how they attract, retain and motivate employees.

"The business climate has clearly affected talent supply and demand, and companies' ability to attract and hire talented employees," says Laura Sejen, global head of rewards consulting at New York-based Towers Watson.

Sejen notes that, even in relatively soft economies, top employees are in short supply. Add to that, she says, the reluctance of workers today, who are simply in no rush to seek employment elsewhere given the uncertainty over economic recovery.

"As a result, many companies find themselves in a position of having to find new and innovative ways to entice and ultimately develop talent and leadership for the future," Sejen says.

The Towers Watson survey also found that organizations are likely to increase their emphasis on leadership, succession planning and career pathing over the next three years.

For example, when asked what their top talent-management priorities were, six in 10 (62 percent) global companies responded with "ensuring the readiness of talent in critical roles," followed by "increasing the investment in building an internal pipeline" of talent (60 percent). About one-half (51 percent) ranked creating "more movement, rotation and development opportunities for talent" as their top priority.

According to Laurie Bienstock, North America rewards practice leader at Towers Watson, leadership development is getting a lot of attention in the United States -- and rightfully so.

"For companies that reduced the number of management layers, advancement opportunities have become fewer, and the gaps and complexity between levels have increased," Bienstock says, "making it significantly more difficult for companies to ensure leaders are prepared to effectively take on new and larger roles."

"The study is a good reminder that employers need to reassess their employee-value proposition to key in on those factors, both tangible and intangible, that would make them attractive to recruits," adds Ryan Johnson, vice president of publishing and community for WorldatWork, based in Scottsdale, Ariz. "This is even more critical when luring top talent for leadership roles."

In the short term, however, recent cost-management and cost-cutting activities, such as hiring and salary freezes, layoffs and bonus reductions, have taken their toll, says Lauren Leader-Chivee, senior vice president of the Center for Work Life Policy, a New York-based organization that works with employers to design, promote, and implement workplace policies that increase productivity and enhance personal/family well-being.

Stress and Burnout

As a result, employers now must figure out ways to restore some balance or face increased costs due to burnout, she says.

"We were not surprised by the survey findings. They reflect what we are hearing from employers," Leader-Chivee says. "What we are most concerned about is a burnout crisis. People cannot sustain these workloads indefinitely. When folks are overstressed and burned out, there will be ancillary costs for business.

"The critical question is, How long can people sustain true productivity in knowledge-based jobs under these stressful conditions?" she asks. "We also know from the data that increased hours are affecting loyalty."

Leader-Chivee says cost-cutting measures have sent the number of work hours soaring among white-collar and professional employees. In the United States, the average work week for that group has climbed by nine hours.

And the higher the salary, the more the hours. For example, she says, the average work week in the United States for those making between $50,000 and $100,000 is 50 hours a week. For those making more than $100,000, it is 60 hours.

"These increased hours are direct results of the recession," Leader-Chivee says. "We absolutely see fallout. We call them body blows. People are reeling from the stress caused by this situation."

One way to help manage it, Leader-Chivee says, is by offering more flexibility in the workplace -- an "emerging critical element in terms of engagement."

"Leadership development and career pathing are good," she says, "but flex opportunities give employees some immediate control over their time and life."

While reducing hours is best, Lead-Chivee says, it also helps to offer a range of flex-type options, including non-traditional hours (in terms of start and stop times) and telecommuting.

"Employers need to focus on allowing employees different kinds of flexibility in their work week, not just reduced hours," she says. "The single most important factor on attraction and retention for Gen Ys, for example, is flex time. And baby boomers who have delayed retirement are also showing an increased interest in flex time."

Redesigning Work

Some experts say the rewards of downsizing itself are suspect, yet companies keep using it as a solution in tough times -- at their own peril.

James Berkeley, director at London-based employee-benefits consultancy Berkeley Burke International, says no world-class organization has displayed sustained growth through downsizing alone.

"It is a dumb tactic," says Berkeley, who lists Starwood, Harrah's Entertainment, Ericsson, ConAgra Foods and other global employers as among his clients. "Stimulating top-line growth should be the sole organizational priority."

Berkeley explains that the greatest amount of hiring today is among small medium-sized enterprises, whether the company is in Chicago, Paris, Abu Dhabi or Hong Kong.

"Indications are that will remain the case during the protracted period of recovery," he says. "Those organizations require multi-talented, pragmatic and short-term result-focused talent."

In essence, he says, employers need to decide whether they are offering work, a job or a career -- and adapt and prioritize reward-program design accordingly.

With work, short-term incentives and interesting work content should be the focus, he says. If it's a job, a competitive compensation and benefits package, a strong affiliation to the brand and the mix of work should be the essential priorities. With a career, education to help employees attain the skills to do today's job and development to attain the skills to do tomorrow's job should be the top priority.

"Few organizations have made that discernible shift," he says.

Bonnie Hageman, CEO at Executive Development Associates, an Oklahoma City-based firm that creates custom-designed human capital strategies, systems and programs, says the Towers Watson survey results indicate that, while most employers have cut costs by reducing headcount, external resources, etc., they have not cut workloads.

"This is an unsustainable model," she says.

Hageman says it's time for employers to apply the 80/20 rule to their businesses, making some real cuts to reduce workloads. Her advice is that, if 20 percent of a company's products or services produce 80 percent of a company's income, it means that 80 percent of services and products could be cut, reduced, outsourced or put on hold.

"If you had 100-percent employee effort and 100 percent of your resources devoted to the 20 percent of your products and services that are bringing in 80 percent of the revenue, stress would be lower, morale would be higher and results would be better," she says.

It's time for employers to go to the root issue: The business itself has to change, she says. It needs to be more targeted.

"It's time to evaluate the business, to get beyond survival and to start thinking about how to thrive again," Hagerman says. "When employers get the work of the business cut down to the efforts that actually produce the results and give employees a reasonable workload with an incentive to stay focused on the most revenue-producing work, attracting talent will not be difficult."