Employers Pondering Post-Recession HR Landscape

June 22, 2009 (PLANSPONSOR.com) - A new Watson Wyatt survey found that a majority of U.S. employers polled will soon roll back some - but not all - of their recession-related benefits and other HR cutbacks.

A Watson Wyatt news release said 62% of companies that have instituted hiring freezes and 69% of those that have made salary freezes plan to stop them within the next year. Also, 48% that have reduced their employer defined contribution plan matches plan to reinstate them in the same timeframe.

But the employers surveyed said other recession changes will take longer to change back. According to the news release, although 60% of employers plan to reverse salary reductions (55% within the next year and 5% within 18 months), 20% will keep them and another 20% are unsure.

Some 46% do not plan to reverse the increases in the percentage that employees now pay for health care premiums. Seventy-six percent of employers plan to keep their contributions to defined contribution retirement plans the same, while only 7% plan to increase them post-recession. Seventeen percent still plan decreases.

“While more employers now feel the worst of the current downturn may be behind them, most are not expecting to go back to ‘business as usual’,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, in the news announcement. “The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment.”

Attracting Talent

Meanwhile, more than half (52%) of companies surveyed expect that staff sizes will decrease from pre-economic crisis levels in the next three to five years. Despite this expectation, more than two in five think that there will be long-term difficulties in attracting (41%) and retaining (45%) critical-skill employees.

Furthermore, four in five companies (79%) expect to see an increase in employees working past their desired retirement age, and almost three-quarters (73%) expect an increase in the percentage of health care costs paid by the employee.

Other survey findings included, according to Watson Wyatt:

  • 55% of respondents noticed a decrease in participant contributions to 401(k) or 403(b) plans.
  • 24% of the companies surveyed believe their results have "bottomed out," approximately double the number of participants who thought so in April.
  • 82% of companies that will reverse hiring freezes will do so only partially and retain them for some locations or positions. However, 78% of those who expect to reverse a salary freeze will do so for all employees and 78% of those who expect to reverse a salary reduction will restore salaries to original levels.
  • Four in 10 companies (39%) will reverse at least some of their travel restrictions in the next 12 months or sooner.

Watson Wyatt's latest survey was conducted in early June 2009 and includes responses from 179 employers.

More information is available here .

Changes companies expect in the next 3-5 years compared with pre-economic crisis levels


align="center">No change


Employees working past their desired retirement age




Percentage of health care costs paid by employee




Difficulty retaining critical-skill employees




Difficulty attracting critical-skill employees




Salary increase levels




Staff sizes




Employer contributions to pension plan




Employer contributions to defined contribution plan - - e.g., 401(k)