Workers Falling Victim to Recession Fatigue as Economy Shows Signs of Improvement

Lengthy, Lingering Recession Takes Its Toll on Views of Company Leaders

STAMFORD, Conn.--(BUSINESS WIRE)--While the economy is showing signs of improvement, employees appear to be struggling with a form of recession fatigue. According to the latest results from Towers Perrin’s Workplace Watch, a quarterly review of employee opinions across large global organizations, employees are expressing more negative views on a range of factors, from long-term career opportunities to company leadership -- suggesting the stress of the prolonged recession is intensifying just at the point when the economic tide may be turning.

“It’s particularly interesting that employees’ fairly positive views of management communication don’t carry over into their fundamental and more negative perception of leadership right now”

The most dramatic declines are in employees’ perceptions about their career development opportunities at their current employers. At the beginning of 2009, slightly over two-thirds (68%) of the respondents agreed their company offered them long-term career opportunities. This quarter, that number was down to 57%, a 16% drop over nine months. The data showed a corresponding drop in the percentage of respondents who feel they have a reasonably good idea of possible career paths at their company -- leveling off at 62%, from 67% in the first quarter of 2009.

“Employees appear to be losing faith in their ability to grow their careers with their current employers, which can present significant talent management challenges as businesses seek to emerge from the recession with an engaged, productive workforce,” said Max Caldwell, a Managing Principal of Towers Perrin. “In some cases, of course, there’s a harsh reality behind the perception; companies have streamlined their organizations, and there may well be fewer jobs overall.

“But a psychological component is at work here as well,” continued Caldwell. “Many employees are feeling less connected to their employers following rounds of layoffs, budget cuts and ongoing uncertainty. This can affect their willingness to commit themselves for the long term -- and prompt more interest in opportunities they might have in other companies or even industries. As we move further into the recovery, employers may see increased, and undesirable, turnover building within their ranks, placing limits on their ability to rebound.”

Perhaps an even more telling sign of recession fatigue in the workplace is the relatively harsh grade employees give their top management in terms of providing leadership. Just half of the respondents surveyed this quarter believe their company’s senior executives are doing a good job at leading the organization -- an 11% drop since the first quarter of 2008, when 57% rated leaders favorably. At the same time, 69% of the respondents feel company management provides a clear sense of direction; 69% are sufficiently informed about company plans, and 77% are well informed about company performance.

“While senior leaders are rarely rated well by the majority of employees,” said Caldwell, “they now seem to bear the brunt of employee resentment toward the deep -- and often personal -- cuts made during the recession.

“It’s particularly interesting that employees’ fairly positive views of management communication don’t carry over into their fundamental and more negative perception of leadership right now,” observed Patrick Kulesa, a Towers Perrin Principal and research director. “In this environment, good communication isn’t enough to carry the day. The key element is the ability to lead through change -- to give employees a sense of confidence in the senior team’s ability to move forward decisively and swiftly, to differentiate the company from competitors and to present a clear path toward growth. For many senior leaders, conveying that mastery of change is a new skill, but one we believe will be increasingly important in the future.”

In a final, somewhat counterintuitive trend with roots in recession fatigue, two-thirds of respondents said they could effectively balance their work and personal responsibilities -- the highest level seen since before the start of the recession and up from 55% just two quarters ago.

“The steady improvement in managing work/life balance underscores two distinct aspects of employees’ experience in the recession,” said Kulesa. “First, despite layoffs and a smaller workforce, reduced customer demand means many companies actually have less work for employees to do. So people have recalibrated what they believe is an acceptable level of work/life balance, particularly in certain industries. Second, anecdotal experience suggests some employees have voluntarily pulled back in their hours or commitment to work because recession fatigue has exhausted the reserves of discretionary effort they’re willing to put forth on behalf of their employers. That’s not to say that employees aren’t working diligently during their standard work week. But they may be less willing to pick up the slack for departed colleagues or put in extra hours to tackle an extra project.”

Fighting the Fatigue

In light of 3Q2009 Workplace Watch findings, and as the economy picks up steam, Caldwell says management should be mindful of recession fatigue’s possible impact on workplace morale, productivity and turnover.

“Leaders need to seize this opportunity to reenergize the workforce before it’s too late,” said Caldwell. “In our experience, it’s much easier for management to arrest a gradual decline in employee engagement than reverse it once it’s in freefall.”

Methodology

The Towers Perrin Workplace Watch study gauges employees’ thoughts and feelings toward their work and employers, identifying new and emerging trends from within the workplace. This third quarterly edition of the study compares data from July through September 2009 with the seven preceding quarters. The third quarter 2009 data cover more than 640,000 employees working in 54 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.