Disconnect between employers, employees threatens loss of key workers

Employers and employees are not in sync over the effect that changes to pay, health care and retirement plans are having on recruiting, motivating and keeping key talent. These findings are based on a recent survey of 262 large U.S. companies across all industries and a complementary survey of 1,100 workers conducted by Watson Wyatt Worldwide, a leading global consulting firm, and WorldatWork, the association for human resources professionals.

With many firms revamping health care and retirement programs, high-performing employees are placing strong emphasis on pay, but many employers appear to underestimate its importance. According to the 2006/2007 Strategic Rewards survey, 71 percent of top-performing employees rank pay as one of the top three reasons they would leave an organization, but only 45 percent of employers believe pay is a top retention issue. Instead, employers rate promotion opportunities (68 percent) as one of the top three reasons employees leave, closely followed by career development (66 percent).

ìThe employer-employee deal is changing, and so are employeesí priorities,î said Laura Sejen, director of strategic rewards consulting at Watson Wyatt. ìRegardless of whether companies are retaining the older ëlifetime careerí deal or a newer, less paternalistic deal, it is important to balance business goals with the rewards that employees value. Firms that do not get the pay-benefits mix right risk losing some of their best talent.î

Top-Performing Employees Leave Organizations for Pay

Top-Performing Employees
Employers

Pay
71%
45%

Promotion opportunity
33%
68%

Work/life balance
26%
25%

Stress
24%
8%

Career development
23%
66%

Health care benefits
22%
0%

Length of commute
18%
4%

Nature of work
18%
8%

Retirement benefits
17%
2%

Company culture
13%
10%

Relationship with supervisor/manager
8%
31%

* Numbers donít total 100 percent, because each respondent chose three reasons.

For the third consecutive year, employers report difficulty in attracting and retaining employees, particularly critical-skill and top-performing employees. More than half (63 percent) of employers report a moderate or high level of difficulty in attracting critical-skill staff, and 39 percent report moderate or high difficulty in retaining them. At the same time, relatively few employees (19 percent) cite difficulty in finding another job as a key reason they remain with an organization, and 15 percent of top performers are not sure they will remain with their present employer.

A factor in that indecision may be the difference between what employees value and what employers think they value. Overall, 86 percent of companies think they do a good job of treating employees well. Only 55 percent of employees agree. Furthermore, 54 percent of employers say they will do a better job of treating employees well over the next three years; only 24 percent of employees make the same prediction.

ìAs labor markets tighten, employee commitment takes on increasing importance,î Sejen said. ìThose employers that understand what drives commitment ó particularly among top performers ó and act on it will be best positioned for success.î

Copies of the survey are available at: