Recession Forcing More Companies to Make Changes to HR Programs, Watson Wyatt Survey Finds
December 18 2008 - 3:55PM
PR Newswire (US)
Number of Employers That Have Made or Are Planning Layoffs, Hiring
Freezes Rises Sharply Since October WASHINGTON, Dec. 18
/PRNewswire-FirstCall/ -- The number of companies implementing
cost-cutting measures, including layoffs, hiring and salary freezes
and smaller pay raises, has risen sharply in just two months,
according to a new survey by Watson Wyatt, a leading global
consulting firm. Watson Wyatt's latest survey found that more than
one in five companies (23 percent) plan to make layoffs in the next
12 months, and almost two in five (39 percent) have already done so
-a sharp increase from only 19 percent of companies who had done so
in October. The number of companies with hiring freezes jumped from
30 percent in October to 47 percent this month, with an additional
18 percent planning a hiring freeze in the next 12 months.
Furthermore, the number of companies that have already implemented
salary freezes jumped from 4 percent in October to 13 percent
currently. The survey was conducted during the week of Dec. 8,
2008, and includes responses from 117 companies across a variety of
industries. "As the economic downturn has both broadened and
deepened, companies in almost every industry can no longer stay the
course," said Laura Sejen, global director of strategic rewards
consulting at Watson Wyatt. "The need to contain costs has resulted
in stronger measures that are ultimately affecting more workers."
The Recession Is Causing Companies to Change a Broad Array of HR
Programs Change Change Change Change planned in planned in already
made already made the next 12 the next 12 Action (Dec) (Oct) months
(Dec) months (Oct) Add/increase restrictions in travel policy 48%
34% 16% 21% Hiring freeze 47% 30% 18% 25% Layoffs/reduct- ions in
force 39% 19% 23% 26% Downgrade/cancel holiday party 35% 19% 8% 18%
Increase benefits communication 32% 35% 35% 35% Eliminate/reduce
seasonal workers 28% 17% 16% 18% Organization-wide restructuring
23% 14% 21% 23% Eliminate/reduce training 23% 10% 18% 18% Raise
employee contribution to health care premiums 20% 21% 17% 25%
Increase pay communication 16% 18% 43% 37% HR function
restructuring 14% 15% 21% 19% Salary freeze 13% 4% 19% 12%
Mandatory holiday shutdown 13% 6% 5% 2% Reduce/eliminate other
employee programs 12% 8% 12% 11% Salary reductions 5% 2% 6% 4%
Early retirement window 3% 4% 6% 5% Reduce employer 401(k)/403(b)
match 3% 2% 7% 4% Reduce workweek 2% 4% 6% 4% Companies are taking
a number of different actions to help them manage costs. Findings
show that almost two-thirds of companies have already taken five or
more of the actions in the table above. "All indications are that
2009 will be a difficult year for both companies and ultimately
employees," said Sejen. "It will be up to employers to find an
effective way to manage this challenge by balancing their financial
situations with the likely impact on employee engagement." Other
findings: -- Those companies that have already made or are planning
to make layoffs indicated that this strategy would affect
approximately 5 percent of their employee population. -- Sixty-one
percent of employers reduced their planned merit increase for next
year from 3.8 percent to 2.5 percent. -- Almost six in ten
employees (59 percent) have moved their 401(k) or 403(b) investment
mix out of equities, compared with just over half (53 percent) in
October. The number of employees taking loans has jumped from 19
percent to 27 percent in the same period. -- Short-term incentive
funding has not changed substantially from October -from a median
of 100 percent funded last year, current STI funds stand at 80
percent funded. For more information, visit
http://www.watsonwyatt.com/HRprogramsupdate About Watson Wyatt
Watson Wyatt (NYSE:WWNASDAQ:WW) is the trusted business partner to
the world's leading organizations on people and financial issues.
The firm's global services include: managing the cost and
effectiveness of employee benefit programs; developing attraction,
retention and reward strategies; advising pension plan sponsors and
other institutions on optimal investment strategies; providing
strategic and financial advice to insurance and financial services
companies; and delivering related technology, outsourcing and data
services. Watson Wyatt has 7,600 associates in 32 countries and is
located on the Web at http://www.watsonwyatt.com/. DATASOURCE:
Watson Wyatt CONTACT: Ed Emerman for Watson Wyatt, +1-609-275-5162,
; or Steve Arnoff of Watson Wyatt, +1-703-258-7634, Web site:
http://www.watsonwyatt.com/
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