Firms Implement Cost Cutting Measures
According to the Prevalence of Layoffs and Layoff Alternatives Survey by WorldatWork and Center for Workforce Effectiveness,
- almost half the sample reported experiencing layoffs in the past year,
- a further 31% expect layoffs within the next six months, and
- of those who have already conducted layoffs, 48% foresee another round of layoffs in the next six months.
Preserving Human Capital
Close to three-quarters of the sample ranked the preservation of human capital as important or very important to upper management. And companies are using a number of cost reduction strategies as alternatives to axing jobs.
The survey found that:
- a little over 40% of companies have implemented hiring freezes
- 15% are considering doing so
- rather than lay off employees, 18% are placing them on temporary assignments.
Compensation Cost Cutting
In addition,
- almost 20% of the companies in the survey have reduced or suspended annual pay increases and bonuses/incentive pay,
- with 25% considering reducing or suspending pay increases, and
- slightly less considering doing the same with bonuses/incentive pay.
Other strategies to cut compensation costs cited, were:
- shorter workweeks
- perquisite reductions
- voluntary severance.
Other cost-reduction strategies, not related to compensation, listed by respondents were:
- reduction or elimination of company travel, mentioned by 28%
- reduction or suspension of training and education budgets, cited by 10%,
- and changing employee health plans, listed by 11%.
The sample comprised 964 respondents.
– Camilla Klein editors@plansponsor.com