The Outlook for Employee Retention and Loyalty

Friday, August 26, 2011

The opening sentence of MetLife’s 2010 9th Annual Study of Employee Benefits Trends begins with “This year’s findings reveal a workforce that has grown more dissatisfied and disloyal, to the point where a startling one in three employees hopes to be working elsewhere in the next 12 months.” The Executive Summary continues with the revelation that,”… employers continue to believe employees are loyal, and they [employers] do not appear to be tuned in to this potential flight risk.” The Executive Summary concludes with, “… cracks in this foundation [employee retention and loyalty] may force employers to pay a price in reduced retention and productivity when the job market improves.” To make its point, MetLife directs the survey’s reader to studies from the 2008, 2009, and 2010 Employee Benefits Trends. In each of those three years, employee loyalty has fallen from a high of 59% to a low of 47%, while employer perception of employee loyalty has remained unchanged at 57%.

The survey’s conclusions go on to report that employers appear to be more focused on cost control with:

     • Controlling health and welfare benefits costs -33%

     • Retaining employees - 22%

     • Increasing employee productivity - 19%

     • Attracting employees - 5

One human resources executive of a 1,000 to 3,000 employee business was quoted in the study as commenting, “Because of the market, I don’t think we’re as concerned with employee job satisfaction. Because you can get the same employee without all the bells and whistles.”

Forty three to 44% of employers surveyed in 2008, 2009, and 2010 reported that they perceived their employees were either “… satisfaction is high among our employees” or “Our employees are satisfied with the benefits …”.

The survey was conducted between Oct and Dec, 2010 consisting of 1,508 interviews with employer benefits decision-makers. The employee segment of the study was comprised 1,412 interviews with full-time employees age 21 and over.

While there may be some truth that some employees have lowered their expectations relative to compensation and benefits, however, I will suggest, as the MetLife survey did, that this is a temporary change. And, what our human resources executive seems to have missed is that skilled workers continue to be in short supply, even now. IndustryWeek, in its October 2010 edition, reported that “Studies show that during the next five years 40% of the skilled labor force will retire.” The Business Courier noted on August 12, 2011, that “Manufacturers find tech-savvy workers in short supply”. Even at the height of the rescission, Paul Krawzak and Melissa Bristow writing for the Kiplinger Letters on December 21, 2009 reported,

“… over 60% of businesses say it’s difficult to find qualified workers. Despite the loss of about 8 million jobs since the recession began, manufacturers as a whole have continued to seek machinists and machine operators, welders, laser die cutters and other highly skilled laborers. And engineers -- chemical, nuclear, environmental and others with special training -- remain in short supply, as do scientists. Demand for nurses and nursing teachers, physician assistants, physical therapists, pharmacists and other health care workers outstrips supply. Ditto, skilled information technology workers, from systems analysts to programmers.”

So you may want to reconsider how loyal your employees are in the face of MetLife’s survey. You and other employers have invested a significant amount of time in recruiting training those employees. Before you cut back on their compensation or benefits consider that your competitor’s gain, could be your loss.