C-Suite Beware: This Could Be The Year Of The Employee Backlash

Jan. 18, 2012 — -- December's employment numbers blew analysts expectations out of the water. Perhaps the news rustled the moat around the corporate kingdom's C-Suite. (Ok, maybe just a ripple) We're certainly not out of the waters of a struggling economy. But with unemployment falling for the fourth month in a row, talent retention concerns might make more of an appearance.

Most employees are glad to have a job these days. There's this unwritten mandate that has reigned since the recession; corporate is king, companies are doing more with less and underlings just have to deal with it and eat porridge. But if the C-Suite ignores improving economic data, might they be dethroned in a workers rebellion?

"I think 2012 is the year of the payback, meaning that all the slashing and burning of the workforce has severely wounded the ability to motivate employees," says Irwin Kellner, Chief Economist for Marketwatch.com.

While corporate profits are doing well, Kellner says the numbers can't grow at the same rate if companies let go or use fewer workers. He warns there will be consequences, such as lower productivity, less engagement and talent fleeing to competition, if management doesn't launch incentives to retain skilled workers and take the 24/7 stress down a notch.

"Workers are afraid but it doesn't mean they are going to work their tails off to come up with the next I-phone," adds Kellner.

The Numbers

If current economic data is a harbinger of things to come, perhaps corporate America might be a bit more concerned about retention, instead of burning workers to a crisp. Let's break down the numbers:

- Unemployment fell for a fourth time in a row to 8.5%, it's lowest point in nearly three years.

- There's been an uptick in the number of Americans quitting their jobs since the recession began in December of 2007, according to the Labor Department.

- The BNA Annual Economic Forecast, (BNA tracks and analyzes legal, regulatory and business information) shows the U.S. economy improving, albeit with limited job creation, expected to increase in the second half. Also, modest gains in private sector workers' hourly compensation.

- The rate of layoffs is lower than anytime before the recession.

The Uncertain Economy

While conditions remain tenuous due to the European debt crisis, the mortgage meltdown, wages not keeping up with inflation and the unknowns of numerous political footballs, including the payroll tax cut debate – it is an election year. A factor that Kellner says is cyclically positive in nature. Election years are generally good for the economy. Both camps tend to play better together in Washington.

While there's a cautious air of optimism, more than 13 million people are still unemployed and more than half of them have been out of work for more than six months. Kellner says uncertainty across the board can sway the economy either way in 2012 as he writes in his Marketwatch.com column, New year's surprise for the economy? But the slight uptick in the "quit" rate is very much on Kellner's radar as he says it's an indication that employees are gaining more confidence that they can find a job elsewhere.

"The rising quit rate may be the first sign that the balance of power is changing in corporate America between the executives and the underlings," says Kellner who adds, "The grandiose plans that the corner office has in terms of creativity might have reached a limit."