Human Resources: Companies Worldwide Struggle to Attract, Retain Workers

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)

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)

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 www.watsonwyatt.com

About WorldatWork

WorldatWork (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.