As the impact of the global economic crisis takes hold, a quarter of large U.S. employers expect to make layoffs in the next 12 months. However, most companies are focusing on increased employee communication and smaller cost-saving measures, according to a survey by Watson Wyatt, a global consulting firm.
The steps being taken by large corporations surveyed by Watson Wyatt differ slightly from what Main Street independent insurance agency owners say they are doing to cope with the financial crisis. These agents are cutting unnecessary spending and searching out new sources of revenue, according to an online survey by Insurance Journal (www.insurancejorunal.com).
But all businesses seem to be taking measured rather than extreme approaches to the crisis.
“Employers are still sorting out the impact of the economic crisis, but changes are clearly in the wind,” said Paul Platten, global practice director of Watson Wyatt’s human capital group. “As they respond to the new environment, companies will have to balance how to control costs, maintain employee morale and prepare for future staffing challenges.”
According to the Watson Wyatt survey of 248 companies conducted in mid-October, roughly one of four is planning layoffs (26 percent), hiring freezes (25 percent) or raising employee contributions to health care plans (25 percent).
While some companies surveyed by Watson Wyatt also plan other changes, including travel restrictions, restructuring and reductions in training, relatively few expect to freeze salaries, reduce 401(k) matches or freeze or close their pension plan.
According to the Insurance Journal survey of 95 independent agencies, 20 percent have cut unnecessary spending and 22 percent have taken steps to communicate more with their customers. About 15 percent have instituted a hiring or salary freeze.
Only 11 percent of agents said they have taken no steps and continue with business-as-usual.
The Insurance Journal survey asked: Which, if any, of these steps has your agency/brokerage taken in light of the financial crisis? The responses are as follows:
Instituted a hiring and/or salary freeze: 15%
Reduced fixed costs and cut unnecessary spending: 20%
Explored new revenue sources or markets: 22%
Taken extra steps to communicate with customers: 22%
Improved internal cash management: 11%
Done nothing different; it’s business as usual: 11%
Source: Insurance Journal at www.insurancejournal.com
According to the Watson Wyatt survey, almost three out of 10 large employers (28 percent) have reduced their merit pay budgets in the wake of recent financial developments. Of those employers that reduced their budgets, the projected raise is now 2.5 percent for 2009, down from 3.7 percent.
Sources: Watson Wyatt
www.watsonwyatt.com
Insurance Journal
www.insurancejournal.com
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