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Companies Worldwide Struggle to Attract, Retain Workers

Many Employers Underestimate Impact of Stress in Employees’ Decision to Leave Company, Watson Wyatt/WorldatWork Survey Finds

WASHINGTON, October 22, 2007— A large majority of companies in the United States and around the world are struggling to attract and retain top-performing and critical-skill workers, according to a new study by Watson Wyatt Worldwide, a leading global consulting firm, and WorldatWork, an international association of human resource professionals. Furthermore, many employers do not fully understand why workers join or leave an organization, an obstacle that greatly increases the challenge of finding and keeping good employees.

Two of three companies worldwide report difficulty attracting top-performing workers, while a full 70 percent have difficulty attracting critical-skill employees, according to the 2007/2008 Global Strategic Rewards® study. These trends show remarkably little variance around the world. In addition, more than half of companies report difficulty retaining top-performing (52 percent) and critical-skill (56 percent) workers. The United States has the highest median voluntary turnover rate, at 11 percent, while Latin America has the lowest, at 5 percent. The study results are based on a survey of 946 companies and a complementary survey of 13,000 employees.

“Attracting and retaining the right employees is a challenge for employers globally,” said Laura Sejen, global director of Strategic Rewards for Watson Wyatt. “Employers that are best at building and maintaining the right work force are often the best at aligning workers’ rewards with the company’s goals. Their performance management programs clearly communicate what workers need to do to get ahead and to improve company performance. This builds a sense of teamwork that makes it easier to retain employees, as well as attract high-potential newcomers.”

Efforts by companies to limit turnover appear to be hampered by an incomplete understanding of employee priorities. For example, workers rank stress as a top reason they would leave their company, but it is not even among the top five reasons that employers cited. Instead, employers cite insufficient pay and lack of career development and promotion opportunities.

Employee/Employer Disconnect on Why Employees Leave Organizations (Global Numbers)

The study found that when employees are satisfied with stress levels and work/life balance, 86 percent are more inclined to stay with their company (versus 64 percent when dissatisfied) and 88 percent are more likely to recommend it as a place to work (versus 55 percent when dissatisfied).

“Worldwide, the frenetic pace of modern business is taking its toll on employees,” said Adam Sorensen, global total rewards practice leader at WorldatWork. “There’s no question that employees are more likely to leave or speak badly of their workplace if they feel overburdened. Companies that take steps to ensure that stress levels are not onerous will save money in the long run by reducing attrition.”

The study also found that to attract, retain and motivate the best employees, companies must clearly communicate expectations about rewards and then deliver as promised. More than two-thirds (69 percent) of employees who say their employers succeed at both promising and delivering rewards are committed to their company and motivated to help it succeed, versus about one-fourth of workers overall. These employees also are more likely to be top performers.

“Clearly setting expectations and delivering on the reward promise is a formula for having a dedicated, productive workforce. When workers see that their performance has a real impact on rewards and that management follows through, employees become more committed and confident about the opportunities with their employer,” Sejen said.

Other findings from the Global Rewards study:

  • Incentive compensation: Globally, companies are making more workers eligible to participate in incentive compensation programs, although nearly one-half of employers also raised the financial targets that must be met to earn those bonus rewards.
  • Performance management: Roughly one-half of companies say their managers do a good job at performance management. Managers at U.S. companies received the lowest ratings, while those in Asia-Pacific received the highest.

For more information and a copy of the report, visit www.watsonwyatt.com/gsr

About Watson Wyatt Worldwide
Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s leading organizations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,000 associates in 31 countries and is located on the Web at http://www.watsonwyatt.com/

About WorldatWork
WorldatWork (http://www.worldatwork.org/) is an association of human resource professionals from FORTUNE 500 and other leading organizations worldwide focused on attracting, motivating and retaining employees.

Founded in 1955, WorldatWork provides practitioners with training and education to effectively design and implement strategies and practices in total rewards, including compensation, benefits, work-life, recognition, and career development. With offices in Scottsdale, Arizona and Washington, D.C., WorldatWork supports its 30,000 members and professionals in 75 countries with thought leadership, publications, research and community. WorldatWork administers certification through the WorldatWork Society of Certified Professionals.

Rank

Employee View

Employer View

1

Stress levels
(37 percent)

Base pay
(52 percent)

2

Base pay
(33 percent)

Career development opportunities
(47 percent)

3

Promotion opportunity
(26 percent)

Promotion opportunity
(45 percent)

4

Career development opportunities
(23 percent)

Relationship with supervisor/manager
(35 percent)

5

Work/life balance
(22 percent)

Work/life balance
(24 percent)

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