Approximately half of the companies that froze salaries and hiring in the past year now plan to unfreeze them in the next six months, according to the latest in a series of surveys by Watson Wyatt, a leading global consulting firm. Despite these plans, however, employers remain concerned about attracting and retaining the always important critical-skill employees.
According to the survey, 54% of employers that froze salaries as the economic crisis gripped the country plan to unfreeze them within the next six months. That's a 21 percent increase over the 33% in August and a jump of 37% over the 17% in June. Just under half, 49%, also plan to reverse hiring freezes at least partially in the next six months, compared with 38% two months ago.
The survey also concluded that a growing number of employers plan to reverse reductions to 401(k) match contributions in the next six months � jumping from only 5 percent in June and 24% in August to 35%. Overall, 56% of companies have instituted a salary freeze and a hiring freeze since the economic crisis began, and 25% have reduced their employer match. Watson Wyatt's latest bimonthly survey was conducted in October 2009 and includes responses from 201 large employers.
"The general economic picture right now is definitely brighter than it was just a few months ago," says Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "However, the recovery is uneven and most employers aren't fully convinced that the improvements they've seen are here to stay. While many plan to hire workers over the next few months, they remain concerned about their ability to attract and retain the right people."
Almost all companies surveyed, 96%, have made offers to new hires in the past three months, and 93% said they anticipate making offers in the next three months. However, approximately one out of five companies still expect to continue making layoffs in the remainder of 2009 or in 2010. In addition, 65% report they are more concerned about the retention of critical-skill and top-performing employees than they were before the economic crisis hit.
Looking ahead three to five years, half of employers expect an increase in difficulty in attracting critical-skill employees, and just over half, 55% expect an increase in difficulty in retaining critical-skill employees. In light of the recession, 44 percent of employers have encouraged managers to make greater use of recognition plans. However, only a scant 8% of these employers have seen managers actually increase their use of these plans to a significant or great extent.
"Despite the slow movement toward recovery, employers are still having to manage a shifting workforce as they balance selective hiring with continuing to make some layoffs," says Laurie Bienstock, U.S. strategic rewards leader at Watson Wyatt. "In this environment, it is no wonder that employers remain concerned about retaining their top talent. However, recognition programs and other plans that keep these employees engaged and motivated can create a key competitive advantage."
Other findings from the survey include:
- Thirty-seven percent of companies think their results have already bottomed out, compared to 27% in August.
- For companies expecting to reinstate their 401(k) or 403(b) match, 70% will change it back to the original level. Thirteen percent will reinstate the match at a new, lower level, while 17% will vary it by year, based on company profits.
- For companies expecting to make offers to new hires, 83% will do so for professional, non-managerial staff, followed by 71% for director, manager or middle management positions. Only 47% will be hiring for senior management or executive level positions.
- Only 37% of employers plan to organize a holiday party in 2009, compared with 47%that organized one in 2008 and 70%in 2007. Two in five (41%) that are planning a holiday party have seen their budgets decrease.
Source: Lauri Bienstock, Watson Wyatt
Writer: Walaika Haskins