Workforce Management in a Shifting Economy

As the recession lingers on, the number one topic of discussion is a U.S. unemployment rate that refuses to dip much below 10 percent. There are several reasons for this persistent, higher rate of unemployment, but the most worrisome one is a fundamental shift in employment economics. The recession has put significant pressure on employers to cut costs, and many have responded by outsourcing as many jobs as possible to Asia. Apple, for example, keeps only a core group of 25,000 employees in the United States, while Foxconn, the Chinese company that assembles iMacs and iPhones, employs 250,000 people, resulting in the creation of 10 manufacturing jobs in China for every Apple employee in the United States.

While one can easily argue that this mass exodus of jobs is hampering the economic recovery, the bigger threat to recovery may be the types of jobs that companies are now willing to outsource. It is not just lower paying jobs such as call center positions anymore. Information technology, finance, back-office staffing, and manufacturing firms are setting up shop in lower cost countries. Companies have slashed millions of domestic middle-skill, middle-wage jobs, which has created a glut of people who can't qualify for highly skilled jobs but have a hard time adjusting to lower-skill, low-wage work.

For U.S. workers who are still among the employed, life hasn’t been all that easy either. Weary of consistently being asked to do more with less, worker productivity actually fell in July for the first time in 18 months. This may be a sign that employees have finally gotten to the point where they are simply stretched too thin.

These disturbing trends are creating new challenges for HR departments that have also been stretched thin. For example, companies that have openings are receiving double the number of resumes for jobs from applicants, many of whom are not qualified. Once the right person is found, HR departments have fewer tools to keep overworked employees motivated and engaged due to dwindling merit and training budgets.

Perhaps the biggest challenge facing HR in the near future will be finding and holding on to high-skill, high-wage employees when the organization has only limited resources. Employers need to remember that there are still skirmishes happening in the war for talent, and HR departments need to be prepared. Here are some suggestions for retaining and motivating high-value employees in a weak economy:

Identify key talent. This can be accomplished by interviews with line managers and tracked in a spreadsheet or with a talent management system.

Create challenging goals. Talented people are consistently looking for new challenges and the opportunity to develop new skills.

Customize rewards. Allocate merit budgets so a disproportionate amount goes to high performers.

If big raises or bonuses are off the table, find out what types of non-cash rewards key employees value and utilize them accordingly. Some possibilities may include:
• Training and development opportunities (either as teacher or student)
• Flexible work arrangements
• Supplemental paid time off
• Retention stock grants
• The opportunity to work abroad or be assigned to a high-profile project

We all hope that the recovery accelerates and unemployment drops. However, one thing is certain: the economics of the employer-employee relationship are shifting, and organizations that want to stay competitive will need to concentrate their efforts on the employees who add the most value.

Comments

[Maria Payroll]

Great post. Thank you for sharing this information. It's sad to know that people are asked to work more for less pay. It really is unfair to them, but sometimes they don't have a choice. They can either accept the terms or be laid-off. As you have said, employee productivity has gone down, because most employees are overworked. What a company should do is find ways to motivate its employees, through benefits or rewards.