Employees putting billions more than usual in their 401(k)s

Interesting article from BenefitsPro about employee's increased input into their 401(k)s by Ben Steverman

(Bloomberg) -- Saving for retirement requires making sacrifices now so your future self can afford to stop working later. Someday. Maybe.

It’s not news that Americans aren’t saving enough. The typical baby boomer, whose generation is just starting to retire, has a median of $147,000 in all of his retirement accounts, according to the Transamerica Center for Retirement Studies.

And if you think that’s depressing, try this on: 1 in 3 private sector workers don’t even have a retirement plan through their job.

But the new year brings with it some good news: If people do have a 401(k) plan through their employer, there’s data showing them choosing to set aside more for their later years.

On average, workers in 2015 put 6.8 percent of their salaries into 401(k) and profit-sharing plans, according to a recent survey of more than 600 plans. That’s up from 6.2 percent in 2010, the Plan Sponsor Council of America found.

An increase in retirement savings of 0.6 percentage points might not sound like much, but it represents a 10 percent rise in the amount flowing into those plans over just five years, or billions of dollars. About $7 trillion is already invested in 401(k) and other defined contribution plans, according to the Investment Company Institute.

If Americans keep inching up their contribution rate, they could end up saving trillions of dollars more. Workers in these plans are even starting to meet the savings recommendations of retirement experts, who suggest setting aside 10 percent to 15 percent of your salary, including any employer contribution, over a career.

While workers are saving more, companies have held their financial contributions steady—at least over the past few years. Employers pitched in 4.7 percent of payroll in 2015, the same as in 2013 and 2014. Even so, it’s still more than a point above their contribution rates in the aftermath of the Great Recession.

One reason workers participating in these plans are probably saving more: They’re being signed up automatically—no extra paperwork required. Almost 58 percent of plans surveyed make their sign-up process automatic, requiring employees to take action only if they don’t want to save.

Automatic enrollment can make a big difference. In such plans, 89 percent of workers are making contributions, the survey finds, while 75 percent make 401(k) contributions under plans without auto-enrollment. Auto-enrolled employees save more, 7.2 percent of their salaries vs. 6.3 percent for those who weren’t auto-enrolled.

Companies are also automatically hiking worker contribution rates over time, a feature called “auto-escalation” that’s still far less common than auto-enrollment. Less than a quarter of plans auto-escalate all participants, while 16 percent boost contributions only for workers who are deemed to be not saving enough.

A key appeal of automatic 401(k) plans is that they don’t require participating workers to be investing experts. Unless employees choose otherwise, their money is automatically put in a recommended investment.

And, at more and more 401(k) and profit-sharing plans, this takes the form of a target-date fund, a diversified mix of investments chosen based on a participant’s age or years until retirement. Two-thirds of plans offer target-date funds, the survey found, double the number in 2006.

The share of workers’ assets in target-date funds is up fivefold as a result.

A final piece of good news for workers is that they’re keeping more of every dollar they earn in a 401(k) account. Fees on 401(k) plans are falling, according to a recent analysis released by BrightScope and the Investment Company Institute.

The total cost of running a 401(k) plan is down 17 percent since 2009, to 0.39 percent of plan assets in 2014. The cost of the mutual funds inside 401(k)s has dropped even faster, by 28 percent to an annual expense ratio of 0.53 percent in 2015.

See the original article Here.


Steverman B. (2017 January 5). Employees putting billions more than usual in their 401(k)s [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/01/05/employees-putting-billions-more-than-usual-in-thei?ref=hp-news&page_all=1

The Retirement Readiness Challenge: Five Ways Employers Can Improve Their 401(k)s

Originally posted October 20, 2014 on www.ifebp.org.

Today, nonprofit Transamerica Center for Retirement Studies® ("TCRS") released anew study and infographic identifying five ways employers can improve their 401(k)s.  As part of TCRS' 15th Annual Transamerica Retirement Survey, this study explores employers' views on the economy, their companies, and retirement benefits. It compares and contrasts employers' views with workers' perspectives.

"As the economy continues its prolonged recovery from the recession, our survey found upbeat news that many employers are hiring additional employees. Moreover, they recognize the value of offering retirement benefits," said Catherine Collinson, president of TCRS.

Seventy-two percent of employers have hired additional employees in the last 12 months (compared to only 16 percent that say they have implemented layoffs or downsizing). Among employers that offer a 401(k) or similar plan (e.g., SEP, SIMPLE), the vast majority (89 percent) believe their plans are important for their ability to attract and retain talent.

Retirement Benefits and Savings Are Increasing (Yet More Can Be Done)

Employers are increasingly offering 401(k) or similar plans to their employees. Between 2007 and 2014, the survey found that the percentage of employers offering a 401(k) or similar plan increased from 72 percent to 79 percent. The offering of a plan is highest among large companies of 500 or more employees (98 percent) and small non-micro companies of 100 to 499 employees (95 percent) and lowest among micro companies of 10 to 99 employees (73 percent).

During the recession and its aftereffects, many 401(k) plan sponsors suspended or eliminated their matching contributions. Plan sponsors that offer matching contributions dropped from 80 percent in 2007 to approximately 70 percent from 2009 to 2012. In 2014, the survey found that 77 percent of plan sponsors now offer a match, nearly rebounding to the 2007 level.

"Despite the tumultuous economy in recent years, 401(k) plan participants stayed on course with their savings," said Collinson. According to the worker survey, participation rates among workers who are offered a plan have increased from 77 percent in 2007 to 80 percent in 2014. Among plan participants, annual salary contribution rates have increased from seven percent (median) in 2007 to eight percent (median) in 2014, with a slight dip to six percent during the economic downturn.

Workers' total household retirement savings increased between 2007 and 2014. The 2014 estimated median household retirement savings is $63,000, a significant increase from 2007, when the estimated median was just $47,000. Notably, Baby Boomers have saved $127,000 (estimated median) in household retirement accounts compared to $75,000 in 2007. "For some workers, current levels of retirement savings may be adequate; for many others, they are not enough," said Collinson.

Five Ways Employers Can Improve Their 401(k)s

"401(k)s play a vital role in helping workers save and invest for retirement," said Collinson. "Until every American worker is on track to achieve a financially secure retirement, there will be opportunities for further innovation and refinements to our retirement system."

The survey identified five ways in which employers, with assistance from their retirement plan advisors and providers, can improve their 401(k)s. Plan sponsors are encouraged to consider these enhancements to their plans:

1. Adopt automatic plan features to increase savings rates

"Automatic enrollment is a feature that eliminates the decision-making and action steps normally required of employees to enroll and start contributing to a 401(k) or similar plan," said Collinson. "It simply automatically enrolls employees. They need only take action if they choose to opt out and not contribute to the plan."

The percentage of plan sponsors offering automatic enrollment increased from 23 percent in 2007 to 29 percent in 2014. Plan sponsors' adoption of automatic enrollment is most prevalent at large companies. Fifty-five percent of large companies offer automatic enrollment, compared to just 27 percent of small non-micro companies and 21 percent of micro companies.

Plan sponsors automatically enroll participants at a default contribution rate of just three percent (median) of an employee's annual pay. "Defaulting plan participants into a 401(k) plan at three percent of annual pay can be very misleading because it implies that it is adequate to fund an individual's or family's retirement when in most cases, it is not," said Collinson. "Plan sponsors should consider defaulting participants at a rate of six percent or more of an employee's annual pay."

"Automatic increases can help drive up savings rates: Seventy percent of workers who are offered a plan say they would be likely to take advantage of a feature that automatically increases their contributions by one percent of their salary either annually or when they receive a raise, until such a time when they choose to discontinue the increases," said Collinson.

2. Incorporate professionally managed services and asset allocation suites

Professionally managed services such as managed accounts, and asset allocation suites, including target date and target risk funds, have become staple investment options offered by plan sponsors to their employees. These options enable plan participants to invest in professionally managed services or funds that are essentially tailored to his/her goals, years to retirement, and/or risk tolerance profile.

Eighty-four percent of plan sponsors now offer some form of managed account service and/or asset allocation suite, including:

56 percent offer target date funds that are designed to change allocation percentages for participants as they approach their target retirement year; 54 percent offer target risk funds that are designed to address participants' specific risk tolerance profiles; and, 64 percent offer an account (or service) that is managed by a professional investment advisor who makes investment or allocation decisions on participants' behalf.

"For plan participants lacking the expertise to set their own 401(k) asset allocation among various funds, professionally managed accounts and asset allocation suites can be a convenient and effective solution. However, it is important to emphasize that plan sponsors' inclusion of these options, like other 401(k) investments, requires careful due diligence as well as disclosing methodologies, benchmarks, and fees to their plan participants," said Collinson.

3. Add the Roth 401(k) option to facilitate after-tax contributions

"Roth 401(k) can help plan participants diversify their risk involving the tax treatment of their accounts when they reach retirement age," said Collinson. The Roth option enables participants to contribute to their 401(k) or similar plan on an after-tax basis with tax-free withdrawals at retirement age. It complements the long-standing ability for participants to contribute to the plan on a tax-deferred basis. Plan sponsors' offering of the Roth 401(k) feature has increased from 19 percent in 2007 to 52 percent in 2014.

4. Extend eligibility to part-time workers to help expand retirement plan coverage

"Expanding coverage so that all workers have the opportunity to save for retirement in the workplace continues to be a topic of public policy dialogue. A tremendous opportunity for increasing coverage is part-time workers," said Collinson. Only 49 percent of 401(k) or similar plan sponsors say they extend eligibility to part-time workers to save in their plans.

"Employers should consider consulting with their retirement plan advisors and providers to discuss the feasibility of offering their part-time workers the opportunity to save for retirement," said Collinson.

5. Address any disconnects between employers and workers regarding benefits and preparations

The survey findings revealed some major disconnects between employers and workers regarding retirement benefits and preparations. For example: Ninety-five percent of employers that offer a 401(k) or similar plan agree that their employees are satisfied with the retirement plan that their company offers; yet, in stark contrast, only 80 percent of workers who are offered such a plan agree that they are satisfied with their employers' plans.

"Starting a dialogue between employers and their employees could help employers maximize the value of their benefits offering while also helping their employees achieve retirement readiness," said Collinson. Just 23 percent of employers have surveyed their employees on retirement benefits and even fewer workers (11 percent) have spoken with their supervisor or HR department on the topic in the past year.

Uptick in wage growth likely in 2014, Bloomberg index says

Originally posted December 18, 2013 by Dan Berman on http://www.benefitspro.com

Here’s a year-end forecast that might give private-sector workers reason to smile: Bloomberg BNA’s Wage Trend Indicator sees the pace of income growth accelerating in the second half of 2014.

After consecutive quarters of flat wages, the index rose to 98.78 in the fourth quarter from 98.70.

“We are beginning to see some improvements in the labor market, with the unemployment rate falling to 7 percent in November,” said economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database.

In the coming months, Kobe said private-sector wage growth was expected to be 2 percent, slightly above the 1.8 percent year-over-year gain reported by the Labor Department in the third quarter.

The index measures seven components. Of those, three were positive in the fourth quarter, three were negative and one was neutral.

The three positive components were the unemployment rate; the average hourly earnings of production and non-supervisory workers, both from the Labor Department; and the share of employers reporting difficulty in filling professional and technical jobs, reported by a Bloomberg BNA survey.

Negative factors were job losers as a share of the labor force, from the Labor Department; the share of employers planning to hire production and service workers in the coming months, from Bloomberg BNA’s survey; and industrial production, as reported by the Federal Reserve Board.

The neutral component was forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia.

The index is published monthly and Bloomberg BNA said it is designed to detect changes in wage growth before they become apparent in the BLS’ employment cost index.


Hotter Economy can Spark Retention Challenges

Although a recent report on U.S. job growth has left many observers disappointed, other economic signs are prompting employers to re-evaluate their benefits and retention strategies to avoid a potential talent exodus.

The Department of Labor reported that the nation added 120,000 jobs in March, down from the previous three months that saw 200,000 or more new jobs. Still, the stock market is up for the year, and U.S. employees appear to be more secure in their jobs. The Randstad employee confidence index -- which measures how confident workers feel about their job security and the economy -- rose in March to the highest level since October 2007, according to Workforce magazine.

An improving economy, however, has a dark side: Talented but unhappy employees will seek better opportunities elsewhere, experts say.

"There is a storm brewing," said Lynne Sarikas, executive director of the MBA Career Center at Northeastern University, in a recent Human Resource Executive online report. "Many people will be looking to make a change once they perceive improvement and stability in the job market. This will have a significant impact on their employers."

More movement in the job market can spur hotter competition among employers for good talent. In addition to competitive wages, robust employee benefits can help employers keep their best workers happy and productive -- and employers are taking notice. A recent study by MetLife found that 90 percent of companies say they don't plan to cut employee benefits in the near future, according to a report by CCH. A large majority (91 percent) of those polled expressed confidence that benefits work as retention tools.

While health, dental, vision and other stalwarts in the retention toolbox remain central to many companies' overall offerings, employers may want to consider additional choices to sweeten the benefits pot.

For instance, companies that want to pull in younger workers may want to investigate defined benefit (DB) retirement plans, according to new research. A recent study by Towers Watson, reported in PLANSPONSOR, noted that 63 percent of workers younger than 40 said in 2011 that they chose their current employer because it offered a DB plan, compared with only 28 percent in 2009.

Education benefits are paying off for some companies, as well. United Parcel Service is sponsoring a program that pays up to $3,000 per year in tuition reimbursement for part-time employees. Executives say the program has spawned talented leaders who have stuck with the company.

"Enhancing the skills and knowledge base for our employees is a fundamental element of our success, and correlates directly with our policy to promote from within," Susan Rosenberg, UPS public relations manager, told the Atlanta Journal-Constitution.

The Good News..and the Bad News

By Susan R. Meisinger

May 14, 2012

A combination of factors may lead to a resurgence of manufacturing in the United States. While that's certainly a positive development, the downside is that HR leaders will be challenged to find job candidates proficient in STEM skills.

Many years ago, my father vehemently opposed my decision to use my savings and buy a used 1970 Volkswagen Bug. It was my first car, and he argued I had no understanding of the true cost of owning a car -- the insurance, gas, maintenance, etc.

A few months later, OPEC imposed a fuel embargo on the United States in response to a U.S. decision to re-supply the Israeli military during the Yom Kippur War. Gas was rationed, and there were long lines at the pumps. I remember this particularly clearly, because that was when my father announced that "we" had made a smart decision to buy such a fuel-efficient car.

The embargo raised concerns -- and brought into sharp focus -- U.S. dependence on overseas oil for its energy needs; a concern that has continued for the past 40 years.

The good news is that some recent reports are suggesting that U.S. energy independence may finally be within reach. This security is because of a huge boom in oil and natural-gas production in the nation and an increased focus on fuel-efficient cars and renewable resources. Some believe this will lead to energy sufficiency for Americans within 20 years.

Why should U.S.-based HR executives care about energy sufficiency (beyond never having to worry about sitting in a gas line)? Because as the nation relies more on domestically produced natural gas, the economics of offshoring manufacturing changes.

The "perfect storm" of lower energy costs, greater employee productivity, rising wages in places such as China and India, and higher international shipping costs, may combine to make the nation much more attractive for manufacturing.

Research from the Boston Consulting Group and a poll from the Society for Human Resource Management suggest the tide is already beginning to change in this regard.

If energy independence and a rebounding manufacturing sector is good news, what's the bad news? After all, it means more job opportunities -- and that's the problem. They are jobs that require science, technology, engineering and math (STEM) skills.

This potential new demand will only exacerbate the existing challenge many HR executives in the manufacturing sector are already facing as they try to fill current positions.

And the statistics on the future availability of workers with, for example, math skills, are pretty grim. According to the Organization for Economic Co-operation and Development, the United States places 18th among its member countries in overall mathematical skills.

There have been many initiatives launched to grapple with the STEM shortage. Educational reforms have attempted to focus greater attention on math skills. Government studies have suggested that communities take up action to meet the challenge. Websites such as Stemconnector.org have been created to try to expedite dissemination of information on strategies that might prove useful.

And summits have been held or planned for concerned parties to discuss how best to meet the challenge. On June 24, in fact, SHRM and the U.S. Department of Labor will hold a summit on the shortage of skilled workers in manufacturing.

So what can just one already overworked HR executive really do?

Begin by resisting the temptation to be overwhelmed. Become fully versed in the scope of what this means for your business -- wherever it's located -- and make sure other executives appreciate the challenge.

Accept that educational efforts and achievements aren't uniform at all state and local levels, and begin to tackle the problem at a local level. Investigate how well the localities are preparing students for a career in manufacturing. Take steps to help educators understand the current -- and future -- needs of your business.

Of course, to do that, you need to know your business well enough to be able to educate the educators, or, to use a hockey analogy, help them skate to where the puck is going to be, not to where it is now.

In addition, learn about and take advantage of new technologies that are now available for workforce training. Training that may have seemed insurmountably expensive in the past becomes more affordable with technology -- especially as the need for skilled talent becomes more critical.

Finally, remember that the good news -- potential energy independence and the resulting rebound to manufacturing -- outweighs the bad news. After all, wouldn't you rather have the challenge of finding skilled workers instead of having to let them go?


Economy recovering, but not accelerating


WASHINGTON (AP) — The U.S. economy's recovery looks enduring. It's just not very strong.

Hiring, housing, consumer spending and manufacturing all appear to be improving, yet remain less than healthy. Economists surveyed by The Associated Press expect growth to pick up this year, though not enough to lower unemployment much.

A clearer picture of the nation's economic health will emerge Friday, when the government reveals how many jobs employers added in April.

"The outlook is for continued moderate growth," John Williams, president of the Federal Reserve Bank of San Francisco, said in a speech Thursday. "Nonetheless, we have nearly 4½ million fewer jobs today than five years ago, and the unemployment rate remains very high at 8.2 percent."

The 32 economists polled by the AP late last month are confident the economy has entered a "virtuous cycle" in which more hiring boosts consumer spending, which leads to further hiring and spending. They expect unemployment to drop from 8.2 percent in March to below 8 percent by Election Day.

But they still think the rate won't reach a historically normal level below 6 percent until 2015 or later. And they predict hiring will slow the rest of this year from a relatively brisk December-February pace.

The government's economic data have been sending mixed signals about the health of the recovery from the Great Recession. Here's a look at the economy's vital signs:


The job market is gradually improving, though not as fast as it had been. From December through February, employers added a strong 246,000 jobs a month. That figure sank to a weak 120,000 in March. The April jobs report could clarify whether March was a one-month dud — or evidence of a more lasting slowdown in job creation like the one that occurred in mid-2011.

The economists in the AP survey foresee average job growth of 177,000 a month from April through June and 189,000 for the next six months. The economy needs to generate about 125,000 jobs a month just to keep up with population growth.

On Thursday, the government said the number of people who applied for unemployment benefits last week fell by a sharper-than-expected 27,000 to a seasonally adjusted 365,000. That pointed to fewer layoffs and a brighter outlook for hiring.

Further cause for hope came in a government report Thursday on worker productivity: It fell from January through March by the most in a year. Declining productivity could be a positive sign for jobseekers. It may signal that companies are struggling to squeeze more from their workforces and must hire to keep up with customer orders.


The housing market has been a dead weight on the economy. The single-family home market, in particular, is still struggling. House prices dropped for six straight months through February, according to the Standard & Poor's/Case-Shiller home-price index. And Americans bought fewer previously owned homes in March.

The economists polled by the AP worry that the lingering effects of the housing bust are slowing the economy's expansion. They say growth can't accelerate until national home prices finally hit bottom.

Still, spending on home construction and renovations rose from January through March by the most in nearly two years. And housing investment, led by apartment construction, is expected to contribute to economic growth this year for the first time since 2005.

The warm winter may also have led more people to buy earlier in the year, essentially stealing sales from March. Reduced prices, record-low mortgage rates, higher rents and the improving job market appear to be emboldening would-be buyers. Many seem to have concluded that prices won't drop much further, if at all.

And builders are laying plans to construct more homes in 2012 than at any other point in the past 3½ years.


Americans have proved surprisingly willing to spend in the face of a wobbly economy. In the first three months of the year, consumer spending grew at an annual pace of 2.9 percent, the fastest in more than a year.

Some economists doubt that consumers can keep it up. They probably can't afford to. Americans' after-tax income in the first three months rose just 0.6 percent from a year earlier. That was the skimpiest pay increase in two years. People spent more, in part, because they saved less. Economists worry that people won't keep spending more unless their income grows.

On Thursday, big retailers including Costco, Macy's and Target, reported that sales last month came in below expectations.


U.S. companies earned more money than analysts expected from January through March. They're beating Wall Street estimates at the best rate in more than a decade. Improved earnings have propelled the Dow Jones industrial average up nearly 4 percent since April 10.

U.S. corporations excluding banks and other financial firms are sitting on more than $2.2 trillion in cash, up from $1.7 trillion in 2009. That surplus means they can afford to expand and hire whenever they're confident enough.


Manufacturing has provided much of the fuel for the U.S. recovery since the recession ended roughly three years ago. American manufacturing expanded last month at the fastest pace in 10 months. New orders rose to the highest level in a year, a signal of more production in coming months. Export orders also rose, despite worries that weaker economies in Europe and China could hold back U.S. exports.

And the busier factories are hiring. Manufacturers added 120,000 jobs a month through March this year, their fastest three-month pace since 1997.

But the economists surveyed by the AP think manufacturers will fill jobs more slowly the rest of the year. If so, that could weaken overall job growth.


US hiring slows sharply

Employers only added 115,000 in April


WASHINGTON (AP) — U.S. employers pulled back on hiring in April for the second straight month, evidence of an economy still growing only sluggishly. The unemployment rate dipped, but only because more people gave up looking for work.

The Labor Department said Friday that the economy added just 115,000 jobs in April. That's below March's upwardly revised 154,000 jobs and far fewer than the pace earlier this year.

The unemployment rate dropped to 8.1 percent last month from 8.2 percent in March. It has fallen a full percentage point since August to a three-year low. But last month's decline was not due to job growth. The government only counts people as unemployed if they are actively looking for work.

In April, the percentage of adults working or looking for work fell to the lowest level in more than 30 years. Many have become discouraged about their prospects. More than 5 million Americans have been unemployed for six months or longer, an astonishingly high number almost three years into a recovery.

Stock futures dipped after the report was released.

Employers added an average of 252,000 jobs per month from December through February, a burst of hiring that raised hopes the economy would accelerate. But job gains have averaged only 135,000 in the two months since then. That's below last year's pace of 164,000 per month.

Weak job gains pose a threat to President Barack Obama's reelection. He is likely to face voters this fall with the highest unemployment rate of any president since World War II.

Some economists attribute the weak gains partly to mild winter, which led some companies to accelerate hiring in January and February. That may have weakened hiring in March and April.

"Over the next couple of months we would expect the monthly gains to settle back into a 150,000 to 200,000 range," Paul Ashworth, an economist at Capital Economics, wrote in a note to clients.

But others are concerned that this reflects a genuine slowdown.

"One month can be weather related, two months of weaker than expected job growth is dangerously close to a trend," Dan Greenhaus, an analyst at BTIG, an institutional brokerage firm.

The slowdown could heighten fears that high gas prices and sluggish income growth are weighing on the broader economy.

Economists noted that the job gains are consistent with the 2.2 percent annual growth in the first three months of the year. Faster growth will be needed to accelerate hiring.

The economy must create at least 125,000 jobs a month just to keep pace with population growth. It generally takes twice that number on a consistent basis to rapidly lower the unemployment rate.

Average hourly wages rose a penny in April, to $23.38. They have increased 1.8 percent over the past year, trailing the rate of inflation.

Manufacturers, retailers, and hotels and restaurants all added workers. So did professional services such as engineering and information technology. Shipping and warehousing firms, construction companies, and governments cut jobs.

Hiring in February and March was revised up to show additional job gains of 53,000.

There have been other signs that hiring will improve.

The number of people seeking unemployment benefits fell last week by the most in a year, the government said Thursday. That drop wasn't reflected in the April employment report, which was compiled from a survey taken earlier in the month. But it could bode well for hiring in May.

And earlier this week, the Institute for Supply Management, a private trade group, said factory activity grew at the fastest pace in 10 months and a gauge of manufacturing employment showed that hiring jumped.

Still, service companies expanded in April at the slowest pace in four months, according to a separate ISM survey. And the group said hiring at those companies, which employ roughly 90 percent of the work force, slowed.

The economy expanded at a 2.2 percent annual rate in the January-March quarter, down from 3 percent growth in the fourth quarter. Economists polled by the Associated Press forecast the economy will grow 2.5 percent this year. In a healthy economy, that would be considered average. But faster growth is needed to spur greater job creation.


Supporting staff to become more resilient has to go beyond telling them to ‘pull themselves together’

By Stephen Bevan

There seems to be no end in sight to the gloomy economic outlook: growth stagnant, unemployment still growing, fear of job losses high and pressure on workers and families building. Business continuity – keeping on track when the firm is buffeted by external shocks – has become a major challenge.

'Resilience' is needed by individuals, organizations and indeed whole communities, if we are to meet these challenges.

There is a lot of press about resilience at the moment. People are invoking the spirit of the blitz, the old-fashioned 'stiff upper-lip' and the need to 'keep calm and carry on' in a period of national adversity. But there has to be more to resilience than stoicism. We need to think of what ordinary people in business can do - or be - to help them cope with adversity, setbacks and uncertainty. Doing so will allow them to do a good job.

Numerous theorists have attempted to define psychological resilience. All agree on one important thing: that it improves an individual's chances to compensate for the uncontrollable negative impact of pressure. The Latin origin of resilience, resilire, means to 'rebound' and our use of the term reflects this quality. For many, resilience is related to flexibility, being 'both the capacity to be bent without breaking and the capacity, once bent, to spring back', in the words of George Valliant, in The Wisdom of the Ego (Harvard University Press, 1993). Applied to the work environment, it is a preventive attribute that equips individuals or a team to anticipate stress and maintain mental wellbeing. One other characteristic of 'resilience' is the ability to build and sustain adaptive capacity. This is beneficial to future work situations: 'being resilient encapsulates the flexibility in adapting to and overcoming adversity, so that personal growth can occur' (Mary Gillespie, PhD thesis, Griffith University, 2007).

I have worried for some time that, by contrast, our use of the term 'stress' has moved beyond its original meaning and in some quarters become negatively associated with learned helplessness or else has been over-musicalized. It is true some are subject to intolerable pressures from a number of work and non-work sources that damage their mental wellbeing and may make them ill. Indeed, the latest forecasts from Age Concern suggest over 7 million people of working age in the UK will have a mental health condition by 2030. Despite this, I find it hard to accept that nothing more can be done to enhance a natural capacity for resilience and adaptability, which - though it resides in us all - can be difficult to deploy effectively in troubled times. Supporting people to become more resilient has to go beyond telling them to 'buck up' or 'pull themselves together'.

We know from research that the resilient tend to have a sense of humor and realistic optimism under stress. They are also better equipped to view problems as opportunities and to learn from mistakes or failures. We know less about whether resilient people or teams are more productive or innovative, whether resilience distinguishes great leaders from also-rans and whether it can (or should) be spotted early during induction. Crucially, we need to know more about how to sustain workforce resilience as a driver of both personal wellness and business continuity.

I am not convinced engagement alone will deliver high performance and smart productivity growth, without a concerted effort to understand, develop and exploit the latent capacity of UK workers to bounce back from adversity. We will need these qualities in spades when the recovery gathers momentum.