Company Layoff Plans Expected to Decline, Watson Wyatt Survey Finds
February 25 2009 - 12:53PM
PR Newswire (US)
Many Employers Still Planning Salary and Hiring Freezes, 401(k)
Match Reductions and Smaller Raises WASHINGTON, Feb. 25
/PRNewswire-FirstCall/ -- As the recession continues, companies are
looking ahead and expecting to experience a long period of economic
hardship. A new update to an ongoing series of surveys conducted by
Watson Wyatt, a leading global consulting firm, shows that most
companies have already made most of their intended sweeping
changes. However, many expect to make further cost-cutting changes
this year, such as salary and hiring freezes, and reduced 401(k)
matching contributions. "Companies have come to terms with the fact
that this recession is going to last and that they can't slash
their way out of it," said Laura Sejen, global director of
strategic rewards consulting at Watson Wyatt. "Many companies are
putting the drastic cuts behind them and are now focusing on
smaller, more sustainable cost-cutting actions." According to the
survey of 245 large U.S. employers conducted last week, 52 percent
have made layoffs, up from 39 percent two months ago. However, the
number of companies planning layoffs has fallen 10 percentage
points from 23 percent to 13 percent. Additionally, 56 percent now
have a hiring freeze in effect, an increase from 47 percent in
December's survey. There has been a jump in the number of companies
that have put into place other changes as well. These include
salary freezes (up to 42 percent of respondents now from 13 percent
in December's survey), reductions in 401(k) matches (up to 12
percent from 3 percent), a shortened workweek (up to 13 percent
from 2 percent) and travel restrictions (up to 69 percent from 48
percent). Companies continue to change a variety of HR programs in
response to cost pressures Already made change Expecting to make
change Feb Dec Oct Feb Dec Oct 2009 2008 2008 2009 2008 2008
Add/increase restrictions to company travel policy 69% 48% 34% 10%
16% 21% Hiring freeze 56% 47% 30% 10% 18% 25% Layoffs/reduction in
force 52% 39% 19% 13% 23% 26% Eliminate or reduce the hiring of
seasonal workers 44% 28% 17% 9% 16% 18% Salary freeze 42% 13% 4%
14% 19% 12% Eliminate or reduce training programs 35% 23% 10% 15%
18% 18% Organization-wide restructuring 31% 23% 14% 20% 21% 23%
Increase communication to employees about their benefits 31% 32%
35% 27% 35% 35% Increase communication to employees about their pay
28% 16% 18% 31% 43% 37% HR function restructuring 23% 14% 15% 22%
21% 19% Reduce/eliminate other employee programs (tuition
reimbursement, subsidized dining facilities, etc.) 23% 12% 8% 18%
12% 11% Raise percentage that employees pay for health care
premiums 22% 20% 21% 24% 17% 25% Reduced workweek 13% 2% 4% 8% 6%
4% Reduce employer 401(k)/403(b) match 12% 3% 2% 12% 7% 4% Salary
reductions 7% 5% 2% 4% 6% 4% Early retirement window 6% 3% 4% 6% 6%
5% Planned merit increases are now 1.7 percent, less than half of
what companies originally planned before the recession hit. Of the
69 percent who have revised their budgets, 58 percent did so in the
last two months. Survey results also show that the majority of
companies (61 percent) expect the current downturn in their
performance to last at least until the end of 2009. Approximately
half of companies (51 percent) plan to increase their cost-cutting
actions in 2009 and beyond. "As the business outlook remains
challenging, employers are buckling down and making hard
decisions," said Laurie Bienstock, U.S. strategic rewards leader at
Watson Wyatt. "This may be good news as companies move more toward
cost-cutting efforts other than workforce reductions in an effort
to hold on to the workers they will need when recovery eventually
comes." Other findings from the survey include: -- Of those
companies that have already made layoffs, 29 percent have offered
enhanced severance benefits such as extended benefits coverage,
extended pay or extended job search assistance. -- Since the
economic crisis hit, 79 percent of respondents have noticed 401(k)
or 403(b) participants changing their investment mix to move out of
equities (up from 59 percent in December's survey), 45 percent have
seen an increase in the number of loans taken (up from 27 percent
in December's survey), and 35 percent report an increase in the
number of hardship withdrawals taken -- more than doubling the
December response of only 16 percent. -- Short-term incentive
funding has not changed substantially since October -- from a mean
of 86 percent funded last year, current annual bonus pools stand at
71 percent funded. 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 7,700 associates in 32 countries and is located on
the Web at http://www.watsonwyatt.com/. DATASOURCE: Watson Wyatt
CONTACT: Ed Emerman, +1-609-275-5162, , for Watson Wyatt; or Steve
Arnoff of Watson Wyatt, +1-703-258-7634, Web Site:
http://www.watsonwyatt.com/
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