Most K Plans Unchanged after Enron

March 12, 2002 ( - Enron may still be a major component of the business news most days, but that hasn't prompted many plan sponsors to make changes in their 401(k) plans, a new survey found.

The TEC Index, a quarterly survey of chief executives by TEC International, a CEO organization for small and mid-sized companies, found that 71% of respondents haven’t instituted any new programs or policies since the Enron scandal first broke last year.

Meanwhile, a quarter of respondents reported they had increased 401(k) related communications to participants, while 3% conducted more audits and 2% added 401(k) program safeguards.

Economic Outlook

The survey also revealed that CEOs are generally optimistic about the economy,

  • 26% say it is already rebounding,
  • half expect a rebound sometime this year,
  • 13% expect the business cycle to turn up only in 2003, and
  • only 1% think it will remain in the doldrums until 2004

The CEOs were most optimistic about the future for the manufacturing sector with a third naming it as the area of the economy expected to grow the fastest. Otherwise:

  • 26% cited information technology
  • 21% said biotechnology
  • 17% cited retail
  • 7% named telecommunications

But, until the economy picks up:

  • 38% said they would cut capital spending,
  • 43% changed their business strategy,
  • more than half said they were repositioning their company to accelerate growth,
  • while only 5% said they were pursuing either a merger or outright sale

Staffing Plans

On personnel plans, TEC also found that, over the next 12 months,

  • 32% of CEOs plan to increase their total staffing by between 1% and 5%,
  • 30% plan to make no plans to their workforce,
  • 25% will increase their number of employees by more than 5%,
  • 10% will trim their payrolls by 5%, and
  • only 4% will decrease total staffing by more than 5%

The sample comprised 1,196 respondents.