For many companies, both large and small, the past 18 months has been an exercise in survival. Companies have slashed budgets by trimming expenses, laying off employees, halting capital investments and freezing hiring – all to survive the worst economy since the Great Depression.

With unemployment now at a whopping 10.1%, the last thing most companies are thinking about is turnover. As a matter of fact, some companies are assuming that their employees who have survived the layoff are just grateful to have a job; but that attitude could prove disastrous.

In a recent study by the Center for Work-Life Policy (CWLP) released in late 2009, this recession has resulted in plummeting employee morale and engagement. Engagement – measured as a percentage of employees willing to go above and beyond for their employers – has fallen 12-24% depending on the sector since the recession began in Q4 2008. And, as if that’s not bad enough, don’t forget that according to the U.S. Bureau of Labor Statistics 40% of America’s workforce will be eligible to retire in 2010! Combine those numbers with the budgetary cutbacks that have all but eliminated employee development programs and talent management and it’s not hard to see there is a huge problem looming on the horizon. Are you beginning to hear that giant sucking sound yet?

So, what is an innovative, forward-thinking company to do? Well, another research finding from the Center for Work-Life Policy found that the number 1 reason top talent employees cite for loving their jobs (outweighing both compensation and recognition) is stimulating and challenging assignments. So, if you’ve had to cut back on employees and eliminate pay increases to survive this recession, you may just be able to parlay that into stimulating growth opportunities for your top talent – getting more work done with fewer employees and improving engagement and retention at the same time. According to Sylvia Ann Hewlett, “a progressive team leader can use strained circumstances to help top performers gain access to important assignments or cross functional roles that expand their skill base and their professional network of colleagues and clients – opportunities that would not be available to them under normal business conditions”.

However, one word of caution, a stimulating assignment does NOT necessarily equate to simply more grunt work and extra hours covering for other laid-off workers. These assignments must be carefully considered both from a business perspective and from an employee development perspective. When done right, this can be a real win-win for both your business and your top talent, and it ultimately may result in less attrition when the economy does turn around.