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Economic woes force changes in staffing, salaries, benefits

by on December 15, 2008 9:00am
in Firing,Hiring,HR Management,Human Resources

As the impact of the global economic crisis takes hold, one-fifth of U.S. employers have instituted layoffs and another 26% expect to shed jobs in the next 12 months, according to a survey by global consulting firm Watson Wyatt (see chart below).

“As they respond to the new environment, companies will have to balance how to control costs, maintain employee morale and prepare for future staffing challenges,” says Paul Platten, director of Watson Wyatt’s Human Capital Group.

According to the survey, conducted in mid-October, 30% of employers have already instituted hiring freezes and another 25% plan to do so within the next 12 months.

More than 35% of firms say they will restructure their organizations to cope with tighter cash flows. More than half are putting restrictions on employee travel.

Benefits programs are also taking a hit as employers look to cut costs. About half the companies surveyed will be asking employees to pay a larger share of health insurance premiums.
 
All this hunkering down means more work for HR—a function that will likely face its own challenges. In fact, 15% of survey respondents say they’ve already restructured their HR departments, and another 19% plan to do so in the coming year.
 
Bottom line: Almost any decision you make to cut staff or benefits will require clear and honest communication with employees. Seven out of 10 companies say they plan to significantly increase efforts to explain staffing and benefits adjustments to employees.

Employers’ response to the financial crisis

Percentage of employers that have already taken the action or plan to in the next 12 months:

Hiring freeze                                                                        55%
Raise employee health care premium contributions     46%
Layoffs/reductions in force                                               45%
Eliminate/reduce seasonal hiring                                  35%
HR function restructuring                                                 34%
Eliminate or reduce training                                            28%
Salary freeze                                                                       16%
Freeze/close pension plans                                            15%
Reduce workweek                                                               8%
Salary reductions                                                                 7%
Reduce employer 401(k) match                                       6%

Source: Watson Wyatt survey

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