The Clock Is Ticking

Over the past three years a litany of bad economic news has been the daily fodder of economists, corporate managers, the politicians and of course the media pundits.  Collectively we have slogged our painful way through reductions-in-force (RIFs), wage freezes, hiring freezes, benefit cutbacks and in general having to do more with less while we looked over our shoulder for the next axe to fall.

And of course we've all experienced the painful shrink of our 401k down to a 201k.

So there hasn't been a lot to smile about.  But perhaps this is finally the year when the freeze starts to thaw, just a bit.  Salary increases are slowly trending upward toward pre-recession levels, according to first results coming out of the latest WorldatWork Salary Budget survey.

• Salary budgets increased by 2.8% in 2011 and are projected to rise by 2.9% in 2012.  Not much, but in the right direction.

• Base salary increases were awarded to 88% of employees in 2011, vs. 86% in 2010 and only 80% in 2009.

• Only 3% of employers are planning across-the-board salary freezes in 2011, vs. 10% in 2010 and 43% in 2009.

So much for the good news

Given all that employees have suffered through is it any wonder that those still employed (and especially those under-employed) are cynical, agitated and teeming with unresolved anger over their treatment?  How many have heard the attitude voiced by "where are you going to go?" or "you're lucky to have a job."  Attitudes like that stay with a person, and they burn deep; those phrases are remembered, to be acted upon when the time is right.  Because the worm will eventually turn.

The clock is ticking for organizations who have mistreated or taken advantage of employees on the back of the bad economy.

What are we seeing now?  While the economy continues to sputter along this year amid mixed labor reports and market volatility, US employee confidence related to pay raises, job security and the labor market fell to levels last seen during the height of the 2008-09 recession, according to the Glassdoor Employment Confidence Survey.

According to their report, 48% of employees reported that they did not expect to receive a pay raise in the next 12 months - the highest level of negativism seen in almost two years.  On the other hand 36% do expect a raise in the next year, but that figure is down 4% since the same time last year.

They don't like their jobs either

Mercer reports (What's Working Survey) that 32% of US employees are seriously considering leaving their organizations, up sharply since the 23% from the good times of 2005.  Meanwhile, a further 21% were not looking to leave but viewed their employers unfavorably and had rock-bottom scores on key measures of engagement, reflecting diminished loyalty, commitment and motivation.  So you have 44% of employees actively dissatisfied with their job and their employer. 

How many of those do you think are silent about their discontent?  How many are your better performers?  How many can you afford to lose?

Overall scores were consistently down across critical engagement measures, while intention to leave was up across all employee segments.  The youngest workers were most likely to be considering the exit: 40% of employees aged 25 to 34 and 44% of employees 24 and younger were thinking about leaving.

A lone light in the window?

One hopeful light in the gloomy picture I've just painted is an uptick of activity in market pricing studies commissioned by management.  Even with an uncertain future ahead more and more organizations are coming to the realization that you can't hold down employee pay forever.  At some point you have to move forward, or risk seriously damaging morale and forcing a mass exodus of talent toward the first competitor who says "Come work for us.  We value you, and we'll treat you right."

Of course, studying the marketplace, understanding how competitive pay levels have changed over the last few years is not a solution in itself.  Companies can still decide not to take action.  They may still not be able to afford to take corrective action.  But at least more of them are asking the questions, which means more are growing worried that this leaner workforce of theirs needs to be valued and rewarded competitively for their efforts.  Just like companies did before the great recession.

But the clock is ticking; employees are growing less patient.  Those who have options to leave are already starting to do so.  Be careful that those left behind are not merely a combination of "average" performers and the unmotivated who only occupy a chair.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Image courtesy of Candie_N

Comments

[E. James (Jim) Brennan]

Good cautionary summary, Chuck! The natives are restless.

[Paul Rowson]

Chuck, your comments are right on target. It's time for HR to demonstrate leadership on this issue. As we with "gray hair" know, organizations that tend to view their human capital as a cost versus an investment often lose sight of how their decisions affect the trust and engagement level of their workforce - especially their top performers and those with high demand skills. What many pay and rewards decision makers may be underestimating in this cycle is just how easy a networked world has made it for top performers to activate their job campaign with targeted precision. If a 2.8% salary budget and other rewards are spread around like peanut butter with CPI at 3.2%, then yes, watch all your top performing "Lamborghinis" and "Ferraris" burn rubber as they leave your parking lot. They may have already started their engines.