By now, it’s no secret that the recession has killed employee job satisfaction and productivity. The No. 1 reason: Payroll budgets have dropped off a cliff.

But employers are determined to find ways to keep talented employees happy and working hard, without increasing payroll, found a recent CareerBuilder survey.

What did the survey of more than 2,700 employers uncover?

Pay worries

Employers’ top five concerns are:

1. Providing competitive compensation (34%)
2. Maintaining productivity levels (33%)
3. Retaining top talent (31%)
4. Worker burnout (30%), and
5. Providing employees with opportunities to move up in the organization (25%).

Becoming more flexible

Despite their concerns, many employers feel as though they have the power to keep employees happy and productive without breaking the bank.

Here’s how they plan to do it:

• Offer more flexible work arrangements (28%)
• Provide more training (21%)
• Promise future benefits, like raises or promotions, when the economy picks back up (18%)
• Offer more performance-based incentives, like company-paid vacations (16%), and
• Provide a higher title without a salary increase (7%).

Once the dust settles from layoffs, pay freezes and other cutbacks, employers are left with a group of staffers with a wide range of negative emotions.

Here are four proven ways to rebuild worker morale and productivity:

1. Game plan

Decide how the cutbacks will be communicated to those who will be left standing. Work out how you’ll reassign tasks ahead of time, and communicate why the changes were necessary.

Also, outline your company’s long-term recovery plan and how employees will contribute to that plan.

2. Let them talk

Two common reactions to cutbacks are anger and fear. Give employees a chance to vent their emotions and postpone your response until later — after workers have made all their feelings clear.

Positive body language, eye contact and nodding your head show that you care without having to say a word.

3. Keep their trust

It’s natural for people to feel defensive when cutbacks occur. These four actions will help you ease their minds and maintain employees’ trust:

• Show concern
• Be straightforward and honest
• Avoid getting defensive yourself, and
• Acknowledge and celebrate successes (whether big or small).

4. Set up training

As employees’ responsibilities shift, odds are many will need additional training — and developing training plans prior to any cuts will make the transition easier.

Tip: Assess which employees have a positive outlook about the changes. These workers will make the best leaders, whom people can go to for training and with questions during the transition.

Not according to recent trends. 401(k) participation over the past year has remained strong despite the fact that 71% of American workers are now living paycheck to paycheck, a new survey by the American Payroll Association has found.

In fact, 82% of workers with access to a 401(k) say they’re still making contributions.

Of those still contributing, 19% have raised their contribution level and 19% have lowered it since Sept., 2008.

Employees happy with their plans

More good news: The majority of employees (54%) are satisfied with their company’s retirement plan, and 61% say they view their employer’s plan as the primary vehicle to save for retirement, according to recent research from Watson Wyatt.

Another 29% admitted they wouldn’t save for retirement without it.

Some other findings from the Watson Wyatt survey:

• More employees (62%) with a defined-benefit (DB) plan are satisfied with their retirement plan than those with only a defined-contribution (DC) plan (51%)
• 46% of employees say they’d be willing to pay a higher amount out of their paycheck to ensure a guaranteed retirement benefit, and
• 52% of employees with a DB plan say their company’s retirement plan is a key reason they continue to work for their employer — only 33% of those with a DC plan say the same.

Until companies see what the financial ramifications of healthcare reform are, they plan to hold off hiring more employees, according to a recent New York Times article.

Then — once companies do finally decide to expand — adding new staff won’t be their first step. Instead, companies will ramp up hours for those already on staff, say business experts.

So many companies have already cut hours for existing workers that when it comes time to ramp up production again, they can afford to increase current employees’ workload before cranking up recruiting efforts.

Only after that will businesses look to add staff, experts predict.

So despite signs the economy is growing, the job market’s worse than it’s ever been in the current recession.

Just how bad have things gotten? Job hunters now outnumber openings six to one, according to the Department of Labor (DOL). That’s the worst ratio since the DOL began tracking open positions in 2000.

Approx. 81% of employers are maintaining their current flex options, according to a recent report by the Families and Work Institute.

In addition, 13% of employers are actually increasing flex-time options.

And only 6% of companies are reporting that they are reducing flexibility options.

Another way companies have tried to stave off layoffs in the past year: by offering reduced workweeks to employees. Nearly 26% of companies have turned to this strategy.

One tactic many companies remain leery of, however — telecommuting. Why? The amount companies spend to maintain a mobile workforce is comparable to what some employers pay per employee for healthcare coverage, revealed a recent Runzheimer International study.

Some of your top performers may simply be biding their time until the first clear signs of recovery — then walking right into the arms of the competition.

At least that’s what an Adecco Group study found. According to the study, 54% of working Americans are likely to look for new jobs once the economy rebounds.

And one group in particular is most likely to bolt. Seventy-one percent of Gen Y workers, those ages 18-29, are likely to look for new jobs once the upturn starts.

Rather than waiting until valued employees are regularly leaving early for “doctor’s appointments” in a suit and tie, get together with staffers more often to see how they’re doing. These informal chats may help to clue you in on a major problem — before it’s too late.

In addition, here are proven ways to retain top performers on the cheap.

Here are the highlight numbers from the survey of 500 HR managers by Towers Perrin:

• 50% of companies have or will introduce or increase investments in wellness and health promotion in 2009 and 2010.
• 32% have or will introduce or increase financial incentives, such as bonuses or premium discounts, for wellness or health promotion activities in 2009 and 2010. Another 30% are considering the use of such incentives and bonuses.
• 45% say they’re considering introducing or increasing penalties for nonparticipation in wellness or health-promotion activities.

Even in a recession?
So, not only are companies investing in wellness, but they’re also weighing whether to punish employees who won’t get on the wellness bandwagon. Why, even in a recession?

For one thing, employers are getting desperate about cutting healthcare costs and controlling near-epidemics in diabetes and obesity.

For another, a study by the U.S. Department of Health and Human Services shows that a dollar invested in wellness yields up to $4.90 in health and absentee savings for employers.

Interesting footnote: ZoneDiet.com did a study that shows obesity has worsened since the onset of the recession. The reason: It’s just a theory, but analysts believe that in tough times, people are more apt to turn to food for comfort.

Peter Dohanich, who runs a funeral home in Manhattan, has found himself in need of some construction work at his house, but in these tight times, he can’t afford to pay much. (So much for the assertion that his industry is recession-proof.)

So, in a listing posted on Craigslist.com,  he’s offering a free funeral to someone who will undertake the job.

Dohanich said he’s looking for a builder or contractor to do some remodeling for a new patio, but  cash on hand is scarce for the project.  That’s when he got the barter idea, since he figures the job will run him anywhere from $6,000 to $10,000 — about the cost of a funeral.

So far, Dohanich said he has received a few calls from prospective takers but has not yet filled the job.

A word of caution to whoever takes the offer:  You’ll probably want to make sure Dohanich is completely satisfied, since he’s likely to get the last word on a deal like this.