The Recesssion is Dead. Long Live the Recession.

Ben Bernanke's was quoted yesterday as saying the recession is "very likely over." he went on to say though that the recovery was not likely to yield a rapid return to job growth. Watson Wyatt has been reporting for several months in its ongoing polling of large employers that workforces will be smaller in the future than in the past.

Next week Watson Wyatt will release the 14th Annual Strategic Rewards survey. This survey which I had the pleasure of initiating and leading from 1995 to 2005, is the premier measure of employer attitudes as contrasted with employee attitudes in the U.S. It also is uniquely correlated to business performance metrics in order to identify the people actions that drive business results. The survey this year highlights the impact of the recession and the changes employers are making to address the downturn and the resulting recovery, including:

• Organizational restructuring has been pervasive and deep
  –Many rounds of layoffs have occurred since the downturn began
  –Multiple cost-cutting measures were employed to avoid layoffs and to augment them
• Reward programs have been affected
  –Merit budgets low and incentive funding reduced
  –Benefits reduced
• Plans are in play to begin reversing pay cuts but not benefit cuts
  –Most companies plan to begin within next 12 months
  –Incentive eligibility offsetting pay increases in some instances continues as a trend
• Negative impact on employee engagement has resulted
  –Greatest impact on high performers
  –Retention risks loom as we move toward recovery
• Adverse impacts may be occurring on Quality and Customer Service
  –Employees believe recent changes affecting quality and customer service
  –Employers are not as concerned and believe they can make do with fewer employees

Looking forward as we have often advocated; employers need to focus on sources of productivity especially with reduced workforces. Restoring employee engagement can create a compelling bond and increase productivity. Companies must proactively address employee morale AND productivity.