Relationships between employees and employers often morph with the changing economy. But the current conditions, including record productivity levels, a jobless recovery and the possibility of health insurance reform, are driving one of the most dramatic shifts since World War II. Savvy employers are seizing the opportunity to permanently lower labor costs by restructuring benefit and compensation plans and even shifting the burden of sourcing health care coverage onto employees.
“I believe we have seen the end of one-size-fits-all benefit plans,” says Rick Beal, managing consultant with Watson Wyatt Worldwide. “Executives may encounter some internal resistance to these nontraditional ideas, but employers will ultimately opt for a less paternalistic role by offering two-tier benefit programs or simply requiring employees to find their own health coverage.”
Smart Business spoke with Beal about the emerging changes to employment relationships and how employers can benefit from the “new normal” economy.
How have employment relationships evolved over time?
In a manufacturing economy, employers managed to maintain a stable work force by offering generous benefit packages that often included defined benefit pension plans and the promise of long-term employment. As the highly educated and less-structured baby boomers entered the labor market, relationships began to morph. Technology-driven productivity increases drove an emerging economy centered on global services and workers assumed greater responsibility for managing their own careers. During the 1990s, employees held the upper hand in the labor market and employers focused on winning the talent war by creating and branding distinct employment value propositions.
How is the ‘new normal’ economy impacting employment relationships?
As labor costs escalated, traditional management models dominant in industries such as auto manufacturing have all but disappeared. While employers will always need to compete for top performers and scarce knowledge workers, the balance of power has shifted toward employers as recessionary layoffs have cut deep. This has created an abundance of workers, especially among lesser-skilled populations, and this shift in supply and demand is redefining the relationship between employees and employers.