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World-Lagging Morale in the U.S

May 19, 2010

Employee engagement appears to be higher in the wake of the financial crisis in many regions of the world—but not in the United States. A new survey of 459 HR executives by consulting firm Towers Watson finds the U.S. was the only place where more companies reported a drop in engagement rather than a rise. Workforce Management senior writer Ed Frauenheim recently spoke with Towers Watson consultant Laura Sejen about the report.

Workforce Management: The United States was the only place showing a dip in engagement. Why?

Laura Sejen: My personal opinion is that the recession in some ways hit us first, hit us faster, hit us harder, hit us deeper. Certainly as compared to Asia-Pac, we’re slower to emerge from the recession. It manifested itself in U.S. companies, on average, taking more and a broader array of cost-cutting actions.

WM: Could the dip have to do with a weaker safety net in the United States?

Sejen: There’s probably something to that. And outside the U.S., either because of regulatory reasons or cultural traditions, they’re less likely to do across-the-board or even selected layoffs. Layoffs, arguably, are pretty high profile and can have a fairly direct negative impact on the level of employee engagement.

WM: How should U.S. businesses respond?

Sejen: If nothing else, it raises the bar for U.S. employers in terms of needing to really think about engagement. They should be asking, “What are some fairly specific things we should be doing?” And, “If we can’t fix all of our engagement issues across the board, are we paying attention to pivotal employee groups, such as high-potential employees.” For example, if because of a drop in business results I was forced to cut the funding on an annual incentive program—and that has been a fairly high-profile part of the rewards proposition—then it should be a priority for revisiting.

WM: Your study shows companies are cautious around staffing growth. Is that the wisest course?

Sejen: There is still a lot of volatility and uncertainty about the extent to which business demand has improved in any kind of way that’s sustainable. As a consequence, hiring managers simply are going to continue to be conservative in terms of adding, in any significant way, talent.

WM: At some point does that become shortsighted?

Sejen: The risk is that whatever increases in demand the company is facing prove to be not only sustainable but fairly robust, then suddenly six months from now they could find themselves short-staffed in a tighter labor market. You don’t want to be the last one going out to market to hire. Even though it seems unlikely right now, labor markets have a way of getting tight pretty quickly for specific skill sets. I don’t see, in the next 12 to 18 months, such robust labor markets that there would be broad-based attraction and retention issues. But there is of course the risk of selected attraction and retention issues for specific types of skills and certainly top-performing employees.

Workforce Management, March 2010, p. 6 -- Subscribe Now!