More Workers Staying Put During Economic Uncertainty

November 8, 2010 ( - All three generations in today’s workforce are exhibiting a decreased propensity for change, according to the 2010/2011 PwC Saratoga U.S. Human Capital Effectiveness Report.

An executive summary of the report says voluntary separation rates across the three generations continue to decrease, with steady declines among Baby Boomers, Generation X, and Generation Y since 2007. Baby Boomers continued to voluntarily leave the workforce at the lowest rate among the three groups – just 4.9% in 2009, compared with 5.9% for Generation X and 10.9% for Generation Y. The Baby Boomer voluntary separation rate has decreased 18% since 2007.  

Generation Y, representing the newest workforce entrants, has substantially slowed its exit rates, with a 37% decrease in voluntary turnover since 2007 and a 25% decrease in the past year. Voluntary departures among Generation X were again down significantly, decreasing nearly 40% since 2007 and 23% since 2008.  

The report said one key measure PwC Saratoga uses to measure quality of hire is turnover in the first year of service. After climbing in the two years prior to the recession, turnover rates in the first year of service are down by 16% since 2008. In 2009, less than one in four employees departed within the first year of service (compared to nearly one in three in 2007).  

While employee compensation costs per full-time employee (FTE) remained flat between 2008 and 2009, the recession had a direct bearing on performance bonuses. The percentage of employee compensation made up of performance bonus pay has declined 55% in the past three years, from 8.8% of salary in 2007 to 4% in 2009. The past year alone saw a decrease of 44%, from 7.2% to 4%.  

PwC Saratoga found increases in the cost of employee health care. Health care costs per active employee increased nearly 6% between 2008 and 2009 to an average of $8,335. While costs are increasing, the share of health care costs borne by employers has decreased by nearly 2% between 2008 and 2009 with employers responsible for 79.7% of health care costs.  

After rising every year since 2005, workforce productivity fell in 2009. Revenue per FTE dropped 6%, from a high of $413,690 in 2008 to $387,993 in 2009. Nevertheless, 2009 results are 18% higher than 2006 results of $330,060.   

Human capital return on investment (ROI), a key indicator of return on workforce investment, is down 23% to 43 cents in profit for every dollar invested in the workforce compared with the 2007 and 2008 result of 53 cents in profit for every dollar invested in the workforce. Additionally, PwC Saratoga results show that organizations have increased their investment in workforce compensation and benefit costs for each dollar of revenue generated. In 2008, organizations invested $221 for every $1,000 in revenue. In 2009, organizations invested $259 for every $1,000 in revenue.  

The report includes data from nearly 300 organizations representing 12 industry sectors that provided information from the 2009 calendar year. The average company in the report has annual revenue of $5.7 billion and more than 19,000 employees.