When the United States economy reached the end of the Great Recession, in June 2009, the nationwide unemployment rate stood at 9.5 percent, and it didn’t stop rising from there, according to the Bureau of Labor Statistics. Business leaders had to adapt their talent strategies and push through the economic downturn. BLS data now shows the U.S. most recently at 4.4 percent unemployment, making it more difficult for employers to retain their staff. Workers have the choice of 5.7 million available jobs, but only 1.5 million people seeking work means business leaders must consider new compensation and benefits packages to gain top talent, in addition to other, more unconventional means.
Technology companies popularized free lunches, beer kegs and a fun office environment as a way to stand out in a highly competitive talent landscape. Other industries upped the ante by adding additional perks like increased workplace transparency around pay and flexible work environments, where employees are given more freedom in when and where they work. These latter benefits are considered essential in the modern workplace, especially as the labor market has tightened and top talent is harder to come by.
However, as economic conditions change — as they inevitably will — to what extent will these cultural norms persist?
“It’s about labor markets, and it’s about what kind of skills are in that market and the kind of skills the company requires to be successful,” said Mark Schug, professor emeritus at University of Wisconsin at Milwaukee, and president of Mark Schug Consulting Services. Those whose skills are in demand — during a recession or otherwise — will be in a strong position to negotiate a good compensation package, which can include things like transparency and flexible work hours. And companies could try to maintain their current business cultures during the next recession. “The biggest incentive always is to keep your best people,” Schug said.
“In recessions, the pressure comes off of companies in terms of attracting and retaining employees in general,” said Laura Sejen, a managing director in Willis Towers Watson’s Human Capital and Benefits segment. However, companies are always having challenges around attracting and retaining their pivotal employee groups, even with ample talent available. Business leaders need to keep their companies attractive to these employees. Where companies can save money is in their annual bonuses and budgets for salary increases, which tend to pause during recession, Sejen said.
Still, benefits like flexible work arrangements transcend the economic cycle. “Workplace flexibility is more or less here to stay,” Sejen said. For companies to attract and retain workers — particularly young talent — they need flexible work as part of their total rewards packages.
Likewise, transparency is driven generationally, Sejen said. Young workers grew up with easy internet access and are used to seeing peers share salaries online and elsewhere. With this practice comes the expectation of business leaders being transparent, too, Sejen said.
Business results back up the benefit of transparency, as those who understand how their managers determine salaries become more engaged. Willis Towers Watson’s 2016 “Global Workforce Study” asked workers if they understood how their total compensation compares to others at their organization; 12.3 percent agreed that they did, but they were disengaged, whereas 51.4 percent agreed and were highly engaged.
During recessions, management needs all the help possible to navigate changing business conditions, said Lindsey Piegza, chief economist at Stifel Fixed Income, a unit of the wealth management and investment firm based in St. Louis. “They learned that navigating unprecedented times does warrant a change in behavior,” she said. A mutual need to be transparent benefitted both employers and employees. Management needed to convey changes in strategy, and employees welcomed this concept.
A Society for Human Resource Management survey published October 8, 2009, shared those sentiments. According to its “HR Leaders Rethink Strategies During Recession,” 80 percent of participating human resources executives reported expanding communications. To save money, however, 55 percent reported layoffs and downsizing.
To ride out the waves of uncertain times, there was some scaling back, Piegza said, especially around holiday parties, office supplies and travel expenses. These small dollar amounts add up, she said, and they’re the easiest for both employers and employees to temporarily cross off the budget.
Lauren Dixon is an associate editor at Talent Economy. To comment, email firstname.lastname@example.org.Filed under: Talent EconomyTagged with: benefits, culture, economy, money, Office, recession, talent, transparency, wages, work