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SHRM Poll: Many Employers Bring Back Laid-Off Workers
 

By Kathy Gurchiek  6/17/2010
 


Relying on attrition, making budget cuts across the organization, cutting employee bonuses and freezing employee wages are the top actions U.S. organizations are likely to take in the next six months as they grapple with the financial crisis at home and abroad, according to survey findings released June 21, 2010. One somewhat surprising finding is that many employers are hiring back workers who had been laid off.

The findings are among those from a Society for Human Resource Management (SHRM) online poll of 419 SHRM members surveyed in March and April 2010 about how their organizations are handling changes in the economy. The 25-page report includes findings for similar polls it released in March and October 2009 and October 2008.

The top strategies are the same ones cited in March and October 2009, but they will be pursued to a lesser degree. In the March 2009 poll, for example, 37 percent expected to freeze employee wage increases in the next six months; 33 percent in the October 2009 poll expected to do so. In March 2010, 25 percent said their organizations expected to use this strategy in the next six months.

Forty-five percent of 211 HR professionals said they have rehired employees they had laid off. That’s up from 30 percent of 288 respondents in October 2009.

Companies “are pretty much down to the bare bones” at this point, said Evren Esen, manager of the Survey Research Center at SHRM. 

Looking down the road six months, should the current economic condition not improve, SHRM found, organizations were leaning toward the following actions:

*Relying on attrition—64 percent said it was a very likely/somewhat likely strategy.

*Budget cuts across the entire organization—58 percent said it was a very likely/somewhat likely strategy.

*Cutting employee bonuses—52 percent said it was a somewhat likely/very likely strategy.

*Freezing employee wages—52 percent said it was a somewhat likely/very likely strategy.

Furloughs for select employees, without shutting down the business, was not a common strategy for 2009 or 2010—88 percent in the 2010 poll said it was not at all likely/somewhat unlikely something they would implement.

“Administratively, it is more difficult to do, to figure that out,” Esen said. “It’s just a complex endeavor, and it doesn’t work for every organization.”

Other strategies not as readily embraced included:

  • Restructuring executive compensation/severance packages—80 percent said it was not at all likely/somewhat unlikely.
  • Reducing salary but not hours—86 percent said it was not at all likely/somewhat unlikely.
  • Reducing salary and hours—86 percent said it was not at all likely/somewhat unlikely.
  • Offering early retirement—87 percent said it was not at all likely/somewhat unlikely.

A slight majority (52 percent) said a hiring freeze was not at all likely/somewhat unlikely. Sixty-five percent of HR professionals surveyed said it was not at all likely/somewhat unlikely that their organizations will lay off workers over the next six months.

Previous Six Months

Making budget cuts across an organization, attrition and freezing wages were the top strategies used in the six months prior to March 2010.

“There hasn’t been a lot of change in terms of what companies are doing to cut cost. It’s pretty much the same over the last three [survey] cycles that we’ve collected the data,” Esen said “After that initial round of layoffs, companies are sticking with ways that are helping them to cut costs but won’t have a huge impact in terms of employee morale.”

One area would have a big impact on employee morale—cutting benefits.

Only a small percentage of HR professionals indicated this was a strategy their organizations used—18 percent in the 2010 poll, 19 percent in October 2009 and 17 percent in March 2009. In October 2008, only 10 percent said they had done this.

Among the 18 percent who indicated in the 2010 survey that they had reduced employee benefits offerings, the top three areas were in reducing health coverage for employees (75 percent), reducing health coverage for spouses/dependents (70 percent) and reducing company-paid relocation programs (70 percent).

Reducing health coverage for employees and for spouses/dependents also were the top actions cited by the small percentage of respondents in the March and October 2009 polls that made economic-related changes to benefits.

However, “not a lot of companies are taking that route,” Esen said. “Employees won’t be happy about not getting a bonus, about not getting a raise, but they don’t want their benefits touched. I think that’s the last resort of a lot of companies,” she observed.

Benefits are in the top two areas of employee job satisfaction, according to past SHRM surveys, and HR professionals “understand that benefits are somewhat sacred, and they’ve left them alone for the most part, so far.”

An organization’s size and whether it’s owned publicly or privately impacts the strategies used in the previous six months, SHRM found in the 2010 data.

Large organizations, for example, had more of a tendency not to renew contracts with existing contract/temporary/contingent workers than organizations with medium-sized staffs (40 percent and 23 percent, respectively).

And publicly owned for-profit organizations were more likely to retrain employees for new positions than privately owned for-profit groups (60 percent vs. 40 percent, respectively). Medium-sized organizations also were more likely to retain employees than small organizations (49 percent and 32 percent, respectively).

Kathy Gurchiek is associate editor for HR News. She can be reached at kathy.gurchiek@shrm.org.

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