What Will U.S. Businesses Do if the Economy Doesn’t Improve in 2010?

Jun 21, 2010
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Alexandria, Va. − If the unsteady economy doesn’t improve during the next six months, one in four HR professionals say their organization is “very likely” to respond with wage freezes according to a poll released today by the Society for Human Resource Management (SHRM).

The closely followed alternative, attrition, ranks second with 23 percent of HR professionals reporting the response very likely. The tactics tied at third with 20 percent of respondents very likely to utilize include: budget cuts to the entire organization; cutting employee bonuses; and implementing hiring freezes.

The SHRM Poll, “Financial Challenges to the U.S. and Global Economy and their Impact on Organizations – Spring 2010 Update,”examines what business survival tactics employers implemented during the past six months and are likely to during the next six.

While 67 percent of HR managers said their company made budget cuts across the entire organization to survive the past six months, 65 percent allowed attrition, followed by 52 percent that froze employee wages.

“The past two years have been very difficult for organizations and HR professionals have had to respond in creative and sometimes very difficult ways to balance the financial realities of the business and the personal situations of the employees,” said Mark Schmit, director of research at SHRM. “Although better economic conditions may be on the horizon, many organizations clearly have tough decisions to continue to make in the short-term.”

Employers hope to keep layoffs at bay — only 13 percent are very likely to utilize this response in the coming months compared with 46 percent that laid off workers during the past six months.

Employers are more likely (18 percent) to not renew contracts with existing contract, temporary, and contingent workers than layoff permanent staff.

Additionally, 45 percent of HR professionals said they rehired laid off employees during the past six months while 43 percent retrained employees for new positions in the organization.

What about employee benefits?

Eighteen percent of HR managers said their organization reduced employee benefits offerings during the past six months. A closer look at the 18 percent number shows that 75 percent of organizations reduced employee health care coverage. Seventy percent reduced health care coverage for spouses and dependents as did 70 percent for company-paid relocation programs.

The financial challenges poll surveyed 419 randomly selected HR professionals across industries and the country. It was fielded in March – April 2010 and results made available in June 2010.

To read the poll, please visit: http://www.shrm.org/Research/SurveyFindings/Pages/default.aspx.

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About the Society for Human Resource Management

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at www.shrm.org.

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