Watson Wyatt Worldwide and WorldatWork recently issued their 2009/2010 US Strategic Rewards Report: Looking toward Recovery – Realigning Rewards and Re-Engaging Employees. The report evaluates the impact of the workforce-based actions of the recession on companies’ ability to emerge in a competitive position and able to retain top-performers in the recovery. Three key findings were:

1) Organisational restructuring has been pervasive and deep
2) There has been significant negative impact on employee engagement (an alarming 25% for top-performing employees as compared to 9% across the board)
3) Employees believe the changes made by their companies are affecting work quality and delivery to customers

The extreme disconnect between management and line employees the report highlights in these last two points are particularly unsettling:

“Top-performing employees are 20% less likely to agree that they understand the link between their own goals and the company’s goals in 2008.”

“Forty-one percent of employees indicate that changes have had an adverse impact on quality and customer service, while only 17 percent of employers believe this is the case.”

Looking at those two findings together, I can only conclude that employees don’t know what they should be working on and how it contributes to company success (alignment problem again) and that quality and customer service is suffering as a result.

It is heartening to see that companies are finally beginning to understand the ineffectiveness of cash-based bonuses (anticipated to drop 24% from 2007 levels) while 23% of companies are increasing their use of recognition programmes, defined by the report authors as “offering a cost-efficient opportunity to recognise the contributions of top-performing employees at a time when the average company has reduced core forms of compensation and benefits.” Why is this good news? Bonuses target a small cadre of elites and rules for achieving the bonus often seems to be a moving target. Recognition, on the other hand, is available to all as an after-the-fact show of acknowledgment and appreciation for a job well done.

How are you building alignment and engagement into your 2010 process? Share your approach in comments.

Thank you! Your subscription has been confirmed. You'll hear from us soon.