While all economic cycles share certain features, they also have unique effects. What’s different for HR in this downturn versus the last? Here are three distinctive characteristics of the current economic slump that are affecting your employees—and potentially reshaping your HR programs:
1. Rising gas prices refocus efforts on commuting assistance, benefits
With gas prices climbing toward $4 a gallon, employees are paying much more to get to work—a direct hit on the wallet.
In fact, a Kaiser Family Foundation survey of 2,000 working Americans found that 44% said that paying for gasoline was a “serious problem” for them. Across all income levels, the cost of gas was the most frequently cited economic concern (see box below).
Impact on HR: Expect to become more involved in getting your employees to work. Among the options to consider putting in play:
More generous commuting benefits
Car pool programs
Rebates for purchase of hybrid vehicles as employees trade in less-fuel-efficient cars
Use of satellite telework centers
2. A financial triple whammy—credit crunch, inflation pressures, stock market tumbles—increases the need for financial education
Employees fear that costs for food, energy and housing will continue to rise faster than their incomes, thus squeezing their household budgets. Moreover, investments are more at risk and lenders are pulling back on credit. Home-foreclosure filings more than doubled in the first quarter of 2008 from a year earlier, marking the seventh consecutive quarter of rising foreclosure activity.
Impact on HR: All of these concurrent events mean that HR would be wise to implement (or step up) financial and retirement planning assistance, education and counseling. Ask your financial services partners (banks, credit union, retirement-savings plan sponsor) for recommendations on expanding offerings. Check with local universities for affordable help—many have developed financial education programs for businesses in their region that can be held on- or off-site.
Consider the economic impact on all employee sectors. While many workers will look for guidance in managing their day-to-day budget obligations, others may, for example, even be contemplating putting off retirement as they recalculate the impact of lost wealth in their houses and other investments.
3. Housing-market slide puts brakes on job transfers, relocations
Unwilling to sell their lower-valued homes for a loss amid the ongoing housing slump, the number of job seekers relocating for a new position fell to a record low in 2007’s final quarter, according to global outplacement consultant Challenger, Gray & Christmas.
In fact, the weak housing market tops a list of reasons employees give for resisting transfers and relocations, according to the Worldwide Employee Relocation Council.
A separate survey by Weichert Relocation Resource found that 80% of HR and corporate relocation professionals say they’re experiencing “significantly higher” levels of inventory. That’s a costly trend driving companies to take greater control over their employees’ home marketing efforts.
Impact on HR: While larger companies might have the financial ability to increase their relocation budgets and help offset the difference between the home value and selling price, most small and midsize companies are unable to cover the costs of relocation and make up for a job candidate’s lost home value.
Government economists say the housing market may bottom out sometime next year. Until then, the continued sluggish activity will weigh on bloated inventories and a shallower pool of buyers. However the housing crisis works out, HR will have to deal with the fallout.
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