Changing U.S. Workforce More Productive in Bad Economy

November 20, 2009 ( new study from PricewaterhouseCoopers (PwC) Saratoga about the state of personnel management among U.S. employers found the recession has given companies a more productive employee base as workers do more with fewer resources.

PwC’s “US Human Capital Effectiveness” report said revenue per FTE has remained on an escalating upward trajectory, as demonstrated by the 25.3% jump from 2006 to 2008. Year to year, the metric rose 16.4% from 2007 to 2008, following a 7.7% rise the previous year. The revenue per FTE metric has increased by 45.2% since 2005.

Researchers also noted that recession concerns apparently helped keep workers in place with a 10% drop in voluntary and high-performer turnover between 2007 and 2008. Not only that, but new hires are staying in place longer and more applicants are accepting job offers, the report said.

Also in the 2007-2008 time period, PwC said younger workers edged out Baby Boomers with 49.6% in 2007 to 50.4% the following year. At the same time, the Baby Boomer headcount shrank from 44.5% to 39.2%, an 11.9%-decrease since 2007, and Generation Y, still a relatively small workforce population segment at 6.4%, is increasing its representation by 18.5% from 2007 to 2008.

“As a larger share of managers and executives edge within five years of retirement, the key Baby Boomer cohort yields to new generations of workers, and talent wars threaten, leadership will need to remain attuned to succession planning, knowledge transfer, and long-term talent strategies,” the PwC researchers asserted. ”On top of the recession, employers today also must manage a workforce comprised of multiple generations of employees, dramatic demographic changes, decreased HR investment, and difficult choices.”

One key that can differentiate employers in such a difficult environment, PwC said, is the company’s flexibility in deploying its HR resources to projects across business lines and cross-line business teams. The report indicated that 54% of respondents were confident of their performance on this metric – 13% higher than 2007.

Noted PwC: “We believe organizations that are adept at leveraging flexibility in their approach to human capital resources are likely to experience productivity gains. The ability to continually generate strong productivity while managing the emerging workforce, pending labor shortages, and ongoing economic uncertainties will distinguish those who realize sustainable gains from those who merely survive today’s challenges.”

The report includes data from more than 300 organizations representing 12 industry sectors that provided information from the 2008 calendar year. The average company in the report has annual revenue of $5.7 billion and more than 17,000 employees.

A copy of the Executive Summary is available here . A free registration is required.