Towers Perrin Analysis Finds Employees Question Sustainability of Corporate Efficiency Gains
STAMFORD, Conn.-(Business Wire)-September 8, 2009 - While many organizations took aggressive action to reduce costs and improve efficiency during the recession, these gains may be at risk, according to Towers Perrin’s Workplace Watch, a quarterly review of employee opinions across large global organizations. A first quarter spike in positive perceptions of corporate efficiency dropped noticeably in the second quarter: Only 58% of the more than 610,000 employee responses included in the second quarter’s analysis agreed that their company’s current structure facilitates efficient operations, a decline of 16 percentage points in just three months. And the percent of those who believe their organization continually works to ensure processes are as efficient as possible dropped to 73% from a high of 81% just last quarter.
“On the occasion of Labor Day 2009, with promising signs of improving economic fortunes, companies face a stark reality check,” said Max Caldwell, a Managing Principal of Towers Perrin and leader of its Talent Management practice. “Did they improve efficiency? And,if so, was it a temporary response to crisis — or is it sustainable? Based on views from people doing the work, the jury is still out on both questions.
“There’s no question companies aggressively cut budgets and head count over the last six months to improve productivity and streamline management structure and processes,” Caldwell continued. “And, in the short term, that approach has worked. But as ‘normal’ routines begin to reassert — even with leaner structures in place — employees have begun to perceive that efficiency has actually slackened. Our experience suggests that three factors may be at play here. First, companies have eased off on the frequency and intensity of messages about efficiency. Second, customer demand and therefore workload have diminished in the wake of reduced consumer purchasing in many companies, so even with fewer staff, employees may feel underutilized. And third, companies often cut costs and layers of management without aligning the underlying organization structure or fixing how work gets done and how decisions are made. So inefficiencies start to creep back into the system.”
This may also explain, in part, one of the more surprising findings from the second quarter analysis: that employees are not feeling undue job-related stress right now. Just under two-thirds (63%) reported they could balance work and personal responsibilities, up from 55% in the first quarter of 2009, which was the lowest percentage recorded for this item since the end of 2007.
“Another factor here, beyond shifts in workload, is greater clarity around organizational goals,” noted Adam Zuckerman, Managing Principal of Towers Perrin and leader of its organizational surveys practice in the Americas. “In this quarter’s Workplace Watch study, 83% said they have a clear understanding of their company’s goals, up sharply from 69% in the first quarter of 2009. And 69% agree their management is providing them with a clear sense of direction.
“This isn’t necessarily surprising, as in the midst of the crisis, most companies banged one communication drum loudly and repetitively: Increase revenues and profits. Focusing on a single organizational message can make a significant difference in reducing stress and ‘noise’ in an organization, particularly in a time of uncertainty. It helps eliminate questions for people about what’s most important and how they should spend their time,” Zuckerman observed.
Beneath the current calm, however, lies a question about the future. While the analysis shows that employee engagement levels have held steady through the most recent quarter, perceptions that companies aren’t sustaining efficiency could change that scenario as the economy turns around. In addition, organizations could face increased swings in employee turnover as the job market opens up again. While just 12% of employees in this quarter’s analysis said they were seriously considering leaving their company in spite of the difficult job market, 21% agreed it would not take a lot to make them look for a job elsewhere.
“While some of our second quarter findings are encouraging,” Caldwell concluded, “there are significant areas of concern for organizations. How much muscle has the organization lost? Are short-term efficiency gains sustainable? Is there a risk that good performers will be more likely to leave when the economy picks up again? These are real concerns that should be on the minds of business leaders.”
Methodology
The second quarterly edition of Towers Perrin’s Workplace Watch study compares data from April through June 2009 with the six preceding quarters to evaluate how the economic downturn is affecting employees’ attitudes about work and levels of engagement. The second quarter 2009 data cover more than 610,000 employees working in 69 companies worldwide.
About Towers Perrin
Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, insurance and reinsurance intermediary services, and actuarial consulting. Towers Perrin has offices and alliance partners in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia, New Zealand and the Middle East. More information about Towers Perrin is available at www.towersperrin.com.
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