Even in the downturn, staff loyalty is not automatic

WM Circle Logo

By: Wise Marketer Staff |

Posted on September 1, 2001

According to a new study by management and human resource consulting firm, Towers Perrin, of nearly six thousand North American workers across all organisational levels, the workforce is more sophisticated, knowledgeable and individualistic than ever before. So, even as vacancies become fewer, employers aren't able to relax their recruiting drives: they still need to compete aggressively in the labour markets and find new and creative ways to recruit, retain and engage suitable employees.

Even though there have been many well-publicised lay-offs, workers are still particular when choosing a new job. The Towers Perrin Talent Report: New Realities in Today's Workforce, reveals the views of both workers and recruiting and retention managers. A range of medium and large companies across many regions and industries were covered.

The employee perspective
From the employee perspective, four key trends emerged:
·  Employees generally don't stop looking at what's on offer. Most are "in the market", in some way, most of the time.
·  Lay-offs cut both ways. If firms aren't particularly loyal to employees, employees don't place much emphasis on a long-term relationship with an employer. The days of two way loyalty and "jobs for life" seem to be over.
·  Employees define their relationship with their employer in increasingly complex ways.
·  Employees care about different things when they're joining a company than when they're deciding whether to stay or how much of their discretionary effort to give.

"Attracting the right people, who have a clear handle on their market value, and then getting them to do their best work, requires employers to think more in terms of a collection of individuals - each with very different goals and needs - than a homogeneous group of workers," said Chris Michalak, a Towers Perrin principal.
The company perspective
According to  HR managers, companies are realising that finding and managing talent is much more difficult than in the past, requiring new strategies and tactics. Two trends emerged here:  talent remains hard to find, and there is a constant movement of employees: companies are laying off and hiring simultaneously � culling weak performers and hiring better ones.

According to Michalak: "The fact is, the power between employer and employee in recruiting and retention shifts continually today and will continue to do so across industries, skill sets and locales. Employers must make talent management a priority. Understanding the environment, the workforce and the key levers to unleashing employee potential is imperative."

Job scanners
While just over half (56%) of the US workers in the study are in the job market in some way only 12% of these said they are actively looking for a new job. The remaining 44% are what is known as "job scanners": they are open to new opportunities or other offers. Of these, 40% have talked with friends at other companies; 36% have researched job posting web sites, and 30% have talked with a former colleague who has recently left the company. The job scanners are a whole new category - people who may not be ready to leave tomorrow, or even next year. They represent a potential "time bomb" for employers, especially since they are the 30- to 44-year-olds who are potentially the future leaders of an organization.

Job scanners frequently use the internet to research vacancies, salaries, company culture and management style quite anonymously. Survey respondents had used the internet to research job postings and salary surveys, to submit resumes, use a salary calculator or to join job discussion bulleting boards.

"The bottom line is that employees are highly informed about their options, and the Internet gives them the ability and ready access to find whatever they want to know, all without risk to their current position," said Michalak.

Not much loyalty
Changing jobs frequently no longer carries a stigma. In fact, six out of ten US respondents didn't think that was any particular period for which they should remain with an employer. A slim one in ten thought that three to five years is appropriate; and a tiny one in thirty chose ten to fifteen years.

The US managers in the study confirm that talent remains a scarce resource. Nearly nine out of ten believe that, compared with more favourable times less than a year ago, it is now no easier � in fact, probably more difficult - to recruit and retain talented employees. And even more believe it is as difficult or more difficult to motivate and engage employees.

Performance-based downsizing
Which brings us back to performance-based downsizing: the study found that some seven out of ten US employers who are making cuts are at the same time continuing to hire talented employees. In fact, the study found that performance-based downsizing is extremely popular. Over half are making cuts based on performance, first trimming low-performing employees and/or business units.

"What we are seeing, possibly for the first time, is a market where at the very time employers are laying off large numbers of people, they are also recruiting needed talent and undertaking major efforts to retain their top talent," said Michalak. "They're focused on identifying the key skills and talents they need and distinguishing between top and average or poor performers."

Employee categories
The survey asked respondents to classify themselves in terms of five categories:
·  Balanced careerist - making work/life balance a priority
·  Company-dedicated careerist - interested in long-term skill development
·  Fast-tracker - seeking high involvement in the job, quick advancement and high rewards
·  Experimenter - trying many different things and building a portfolio of skills
·  Free agent - moving quickly between/within companies where their skills are in highest demand.

Not too surprisingly, nearly half classed themselves as a "balanced careerist". Next came  "company careerist". Only 6% chose "free agent".

Most want a relationship
It would seem that, contrary to some popular belief, most employees want some kind of relationship with an employer - but only if it's based on mutual respect and a deal that suits their individual needs.

Pay alone won't keep them
Employees want a range of tangible and intangible rewards, but value different things at different stages of their careers and working relationships with a company. Base pay and health care benefits come out as critical fundamentals, but there are other elements too. For instance, pay is certainly an important factor in attracting potential employees but it would seem that pay alone won't keep them in a job. Over half of US respondents would leave their current job for a pay rise of 5-10%.

"What brings someone to a company is different from what keeps him or her there and is also different from what engages that person; that is, capturing the discretionary effort that produces top performance," said Michalak. "If employers fail to distinguish among these, they fail to realise full return on their investments in people and rewards."

A good reputation
According to Michalak: "Companies that aspire to top performance need to focus just as much attention, if not more, on engaging employees once they're on board, and focusing them on the things that will produce results for the business."

Study respondents were looking for such things as: a reputation in the market as a good employer; an environment that supports teamwork and innovation; leadership effectiveness; a culture that recognizes top performers; development and advancement opportunities; and a clear line of sight between employees' day-to-day activities and business goals.

An interesting finding � though not surprising - of the study is that those firms that provided their shareholders with the highest returns had the best reputations as employers. They also tended to recognise and reward talented and top performers more than average performers.

The study was conducted in the US and Canada during April and May of 2001. A total of 5,707 randomly selected employees from companies with more than 500 employees responded. Of those, 4,942 were from the US, and 765 were Canadian. More than three-quarters of the respondents were from Fortune 1000 companies, and nearly 30% of the respondents were managers.