FOR IMMEDIATE RELEASE
Towers Perrin Survey Finds Workers Accepting More Financial Risk and Increasingly Concerned About Job and Financial Stability
Employees Consider Delaying Retirement and Plan For Possible Dips in Future Earning Potential
STAMFORD, CT, January 15, 2009 — The strain of the continued global economic crisis is starting to show in America's workforce, as more employees hunker down to weather the financial storm. According to survey findings released today by global professional services firm Towers Perrin, 82% of U.S. workers have been personally affected by the downturn in the economy. An even greater percentage — 91% — said their companies have been affected as well. Over half (54%) reported their companies are not hiring, while 45% reported staffing cuts at their companies. In light of these actions, and the steady rise in unemployment, most employees appear to be shifting their focus from maximizing career advancement and incentive opportunities to securing basic pay and benefit packages.
The survey was conducted online between December 3 and December 11, 2008 and targeted U.S.-based employees of midsize and large companies. A total of 469 employees participated in the survey, which provides the most current insights into how U.S. workers are feeling about the economic crisis and its impact on their personal and professional lives. It updates an earlier online survey conducted by Towers Perrin in August of 2008 and shows significant shifts in workforce sentiment in just four months.
"In an economic downturn, employees want to lock down the things they need to provide stability and security for themselves and their families. A steady paycheck and set of core benefits, including health care coverage, typically top that list," said Emmett Seaborn, a Towers Perrin principal and head of intellectual capital development for the firm's Human Capital Group. "What's also notable, though, is employees' sense of what we might call 'shared destiny' with their employer. They understand their stability rests on the organization's performance and success, and they're willing to commit to helping drive that success as much as they can."
"For instance, 76% of the respondents in the December survey agreed they were personally motivated to help their company succeed, up from 69% just four months earlier. This suggests they are willing to work hard for their organizations in an effort to keep the company and in turn, their jobs, safe in the long term."
In fact, according to this study, job security and long-term earning potential are the key concerns for respondents. Forty-five percent of those polled believe they face greater risk that their job will change or be eliminated. And 55% believe the risk that their future earnings will plateau or decline has increased as well.
Amid this recessionary angst, the survey also shows that employees' priorities are changing. When polled on the factors most important to their work experience, respondents put a "secure position they can count on for the long term" at the top of the list. Fully 59% ranked that among their top five, up from 46% in August 2008. Having adequate benefit protection for themselves and their families rose sharply in importance as well, moving into the number 2 slot from the number 4 previously, with 56% putting this in the top five in December, compared with only 37% in August. Interestingly, working for a successful organization with a strong future broke onto the list of top five factors for the first time — underscoring that sense of shared destiny — while maximizing earnings actually fell from the top-five list.
"Obviously, people care tremendously about income during a period like this," Seaborn noted. "But the emphasis shifts, from maximizing it to stabilizing it. Today's workforce is quite sophisticated. People know the stability of their income depends on the stability of their company. They're willing to give in the short term, to get in the longer term. That's why we actually see less dissatisfaction with pay during periods like this. It's part of an implicit agreement that we'll weather the storm together, and the rewards will come later."
Employees' depleted retirement accounts also appear to be driving dramatic changes in their plans to retire. Nearly two-thirds of those polled believe they face a much greater risk that they won't be able to afford to retire when they want to. Even more telling, 14% of those polled in the August 2008 survey said they planned to retire in the next few years. In the December survey, that number dropped to 9%.
"This change could have a profound effect on the workplace over the next several years," said Max Caldwell, a Towers Perrin Principal and head of its global workforce effectiveness practice. "As older employees decide to stay in the workforce, advancement opportunities for younger workers will be increasingly limited. Baby Boomer, Gen-X and Gen-Y cohorts will likely interface more often and for a longer period of time. While this allows organizations to benefit from having three generations of knowledge and perspective, it can also lead to intergenerational conflict. Organizations will need to consider how to best leverage a diverse workforce while mitigating potential tension issues."
Senior Management Becoming More Visible and Available
Possibly in response to the extent of change in the business environment, and growing employee concerns, senior management seems to be more available to employees than was the case just four months earlier. Close to half (46%) of the respondents agreed their company's senior management tries to be visible and accessible to employees, up from 41% in September 2008. Thirty-seven percent agreed their senior leaders communicated openly and honestly with employees, up from 32% four months earlier. And 36% felt their leaders had a sincere interest in employees' well-being, up from 30% in just four months.
"In general, senior leaders don't get high marks from employees," Caldwell noted. "In the global employee surveys we've conducted for more than a decade, views of senior management are decidedly mixed, and establishing connections with employees remains a key challenge for many top executives. So one of the most interesting aspects of these findings is that they’re taking us back to the more steady state we last saw in 2007. This is heartening, especially at a time like this, when we might equally expect to see these views move further down, not back up," Caldwell continued.
"They suggest that more leaders are stepping up to the plate in terms of providing a well-thought-out rationale for their actions and explaining that rationale clearly to workers. Employees always want sincerity, honesty and strategic direction from their leadership, but those things are particularly critical in unstable economic times when fear and cynicism are rife. Leaders who maintain open lines of communication now will reap the benefits of a more engaged workforce, not only during this difficult time, but also into the next period of growth."
About Towers Perrin
Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, insurance and reinsurance intermediary services, and actuarial consulting. Towers Perrin has offices and alliance partners in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia and New Zealand. More information is available at www.towersperrin.com.