More Employers Planning to Reverse Pay, Other Cutbacks, Watson Wyatt Survey Finds
August 13 2009 - 1:59PM
PR Newswire (US)
WASHINGTON, Aug. 13 /PRNewswire-FirstCall/ -- The number of
employers planning to reverse salary cuts and freezes and restore
matching contributions to 401(k) plans has increased in the past
two months, according to the latest update to an ongoing series of
surveys by Watson Wyatt, a leading global consulting firm.
Nevertheless, the survey also found that many employers remain
concerned about retaining their top performers. The survey found
that 33 percent of employers that froze salaries plan to unfreeze
them within the next six months, up from 17 percent two months ago.
Forty-four percent plan to roll back salary cuts in the next six
months, compared with 30 percent two months ago. Additionally, 24
percent of employers plan to reverse reductions to 401(k) match
contributions in the next six months, versus 5 percent in June.
Watson Wyatt's latest bimonthly survey was conducted in August 2009
and includes responses from 175 large employers. "Some employers
are seeing the light at the end of tunnel and feeling optimistic
about the prospect of improved business results," said Laura Sejen,
global director of strategic rewards consulting at Watson Wyatt.
"However, even as some of the program cuts are rolled back, many
employees are facing smaller raises, lower bonuses and higher
health care costs." The survey found that 66 percent of respondents
that increased the percentage that employees pay for health care
premiums do not expect to reverse that decision. Also, 40 percent
of respondents are planning to shift more health care benefit costs
to workers by increasing the percentage of premiums they pay.
Another 41 percent of companies expect to increase the deductibles,
copays or out-of-pocket maximums for their 2010 health care plans.
In addition, a majority of employers (52 percent) are now more
concerned about retaining their top performers and critical-skill
employees than they were before the economic crisis hit. In an
effort to keep employees engaged, 83 percent of employers have
increased communication and 40 percent have held additional
employee forums such as town halls or other interactive sessions to
address economy-related concerns. While almost half (47 percent)
have changed employee roles to expand responsibilities, a far
smaller number is expanding the use of recognition programs (27
percent) or creating special compensation programs for
high-performing or at-risk employees (18 percent). "Even as
employers look ahead to an eventual economic recovery, they still
face many challenges, such as the potential disengagement of top
performers," said Brian Wilkerson, global director of talent
management at Watson Wyatt. "Employers can manage this to some
extent not only by effectively communicating with employees, but
also by ensuring that they are rewarded for the job that they do --
in particular taking into account how that job might be changing in
the current environment." Other findings: -- The survey found that
almost three in 10 (27 percent) think their company's business
results have already bottomed out, and a further 15 percent think
they are currently at bottom. -- Looking ahead three to five years,
83 percent expect to see an increase in the number of employees
working longer, past their desired retirement ages, and 43 percent
of employers expect to see a reduction in staff sizes. Half also
expect to see an increase in the difficulty of retaining
critical-skill employees, and 46 percent in attracting them. --
More than a third of employers have noticed an increase in the
number of employees taking hardship withdrawals (36 percent) and
loans (37 percent) from their 401(k) and 403(b) plans in the last
two months. For more information, please visit
http://www.watsonwyatt.com/hrprogramsAug09. About Watson Wyatt
Worldwide 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 33
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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