Recession Aftermath

I recently was interviewed for an article in Smart Business magazine on the changes facing business leaders as we begin the process of recovery and renewal post recession. The link to the article can be found at http://www.rickbeal.net/NCA_Watson_0809final.pdf. Key touch points include increased transparency, enhanced articulation of the employee value proposition and heightened emphasis on risk mitigation.

It's also worth noting that the most recent data I have seen continues to indicate that pay programs will return to a new normal with a healthy incentive component associated with downside protections and risk mitigation. Don't however count on rollbacks of the recent cost shifting in benefits programs. The trend is here to stay.

Finally while the aftermath of employment actions will be felt for years to come, employers are cutting back on their recession-oriented communications. The best advise is to continue with enhanced communications regarding business performance and the link to the employment deal rather than dropping the level of communication. Watson Wyatt's forthcoming 2009/2010 Communications ROI study highlights this trend.

Conventional Wisdom

The long-held conventional wisdom that people won't leave over benefits but they will over compensation appears to be playing itself out in organizational responses in these later stages of the current recession. As the economy turned south the majority of organizations took compensation cash saving actions in the form of layoffs, furloughs and pay decreases along with benefit cash saving actions in the form of higher deductibles, co-pays or out-of-pocket maximums and increased premiums.

As the economy appears to have bottomed out and employer concern shifts to retention of top performing employees the trend is also shifting to returning salaries to levels approximating pre-downturn. In addition the reduced headcount has provided opportunities for expanded roles and responsibilities for high performers as a means of engaging and retaining their services.

Despite these improving trends on the compensation side their appears to be little to no improvement in trend on the benefits side. Many of the cost shifts that occurred recently are likely to be retained. Going forward the employment deal has employees owning a greater proportion of their health care and retirement costs. In order to manage expectations and keep people engaged, a large majority of the participants in a recent Watson Wyatt study inidcated they have significantly increased their communication with associates.

Watson Wyatt bimonthly report on HR trends digs into this reality and tracks the trend over the last 10 months. http://www.watsonwyatt.com/news/pdfs/WT-2009-13301.pdf

Merger Announcements

In the course of consulting to clients on their issues with total rewards in a down market and industry consolidation post financial meltdown it has come to pass that Watson Wyatt has announced a proposed merger with Towers Perrin. While consultants frequently handle the high paced analytical and redesign processes associated with restructuring in a merger environment they rarely experience the process of sitting quasi-idly by while a merger occurs “to” them. A number of my clients have justifiably had some fun with the notion of consultants consulting to themselves. As all of us know intuitively the real learning’s that affect associates aren’t in the analytical building blocks of an organization (although critical to be completed correctly) but rather in the internal communications that allow continued focus on clients as the structural transformations take place.

Watson Wyatt’s communication team recently supported a major automaker in their communications as their market fell apart. Leadership communication was deemed critical to keeping the organization focused. Key messages to Leaders were:

• Be a Leader. Leaders don’t have to have all the answers. Tell employees what you know and what you don’t explain the steps the organization is taking to identify and resolve issues. Knowing their leaders are in the lead through uncertain times is crucial to keep employees engaged.
• Show your strengths. Reinforce the core competencies and values that make your organization successful. Talk about how they will help the new organization thrive in the future.
• Be visible. Credibility, conviction and passion are important messages that only actual presence can convey. Employees can benefit from seeing engaged and informed leaders.
• Use your team. Make sure managers who report to you know how and what to communicate, and that no one is a bystander. Limit potential damage from informal, uninformed conversations that are overheard and ripple through every organization.
• Be timely. Employees should hear your perspective and not someone else’s. Encourage employees to visit the approved sources of information often to keep up to date on news and the company’s perspective.
• Share responsibility. Be clear about what you want people to do. People want to help – tell them how. It’s never a bad time to reinforce customer focus.
• Give up the myth of message control. Find ways to listen to what is on employees’ minds. Monitor the press and social media for what is being said about the company and industry. Commit to quickly distributing answers to rumors and clarifying inaccurate statements.
• Be humane. Some employees are also experiencing personal trauma from the changes. Acknowledge it and help them move through it.
  
  As consultants we have spent years saying the most elegant design is wasted if the communication is given short shrift. We now have the opportunity to eat our own cooking and show that it is much better to have an adequate design with great communications in order to drive results.