How Small Business Owners and Employees Are Surviving Recession

By Tali Arbel | April 24, 2009

Small-business owners are concerned about their retirement savings, nearly half have put a freeze on hiring, they are drinking way more caffeine than they used to — but at least they haven’t given up on exercise.

The survey of small businesses, companies with 100 or fewer employees, by American Express, found that 48 percent have instituted a hiring freeze, 39 percent have put in a salary freeze, and 37 percent are tapping their personal assets.

Nearly 80 percent are worried about saving for retirement, and 55 percent say their retirement savings are not on track. Three years ago, only 41 percent felt that way.

Meanwhile, almost 60 percent say they aren’t planning any capital investments for the next six months. Of those who are, the biggest number –30 percent — plan to put money into technology.

And 23 percent of small business owners said they were drinking 4 or more caffeinated drinks a day, compared to only 9 percent two years ago.

Exercise levels, however, remained constant. About a quarter of those surveyed say they still exercise every day.

American Express’ business monitor survey is taken twice a year. It randomly surveyed 727 small business owners over the phone in February and March.

Employee Survival

What about workers? How are they handling the economic downturn?

Many are delaying retirement, according to human resources executives in a recent survey.

The poll, by human resources and compensation consultancy Towers Perrin, found that 59 percent of those surveyed said they believed employees were delaying retirement, while 43 percent said workers were increasing loans and hardship withdrawals from company retirement savings plans. Another 38 percent said they saw declining employee participation in defined-contribution plans.

Nearly half said they had closed or would soon close company plans to new participants, and another 10 percent were considering doing so.

However, only 8 percent of companies said they had suspended matching contributions — although 19 percent were considering it.

Companies are also cutting medical benefits — 69 percent of those surveyed said they had or were considering reducing or cutting medical benefits for future retirees, while 57 percent of those polled said they had or were thinking about cutting medical benefits for current retirees.

Employers are also pushing more costs onto workers, with 81 percent of survey respondents saying they had or would consider tightening provisions in their prescription drug plans.

Towers Perrin polled a random group of 480 HR and benefit executives from its client base in February.

Surviving a Merger

More than 44,000 jobs have been lost this year due to corporate merger and acquisition activity, according to an outplacement firm.

Typically, those who work for the acquired company have more reason to fear layoffs. But John Challenger, chief executive of Challenger, Gray & Christmas Inc., said that’s not necessarily true. He notes the acquired company could have been bought to fill a need for specific expertise.

Oracle Corp.’s deal for Sun Microsystems Inc. announced this week may be like that, he said. The two fit together “like jigsaw pieces,” and the two may exist in more stand-alone fashion in the future rather than being condensed together.

However, those who work at the headquarters of the acquired company in a support role — accounting, purchasing, marketing, human resources — should worry, Challenger said.

“Executives at the acquired company should be very worried,” he said. “You only need one executive in each role.”

However, there are some things you can do:

  • Let new bosses know what you’ve accomplished. They will likely not be aware. “Toot your own horn, more than you might normally,” Challenger said.
  • Develop relationships with people from the new company. The more people who can advocate for you in a new organization, the better. A merger can be a chance to erase bad blood with a previous boss — those people may be vulnerable to job loss now, too.
  • Come early, stay late. Make sure people see you working hard, Challenger said.

However, sometimes companies are bought because their business is disappearing, and the buyer only wants access to their customer list. In that case, a lot of operations get closed, and there’s not much you can do –so start looking elsewhere right away, Challenger said. Put an updated resume together and network.

Topics Commercial Lines Business Insurance Human Resources Small Business

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