Even though Canada and much of the rest of the world is in the midst of a recession, the majority of Canadian employers are proceeding with caution, avoiding layoffs where possible, according to a recent survey conducted by Hewitt Associates, a global human resources consulting and outsourcing company. Instead, organizations are looking at alternative solutions to manage human resources budgetary constraints, while still investing in those programs that drive employee engagement.
Survey results indicate that, for the most part, employers are considering changes with an eye to the future. Few are cutting back on employee benefit programs: any reductions are focused on discretionary spending, such as business travel. "Employers recognize that the recession won't last forever and they don't want to find themselves short of employees or skills when things improve," states Tim Clarke, Hewitt Canada's benefits practice leader.
Limited layoffs but fewer new hires
Fifty-three per cent of survey respondents are scaling back recruitment efforts and 47 per cent have put a stop to plans for new hires. In comparison, thirty-one percent of the 192 companies surveyed indicate some layoffs are expected. Most of these layoffs will occur in the manufacturing sector, or at retail, financial, and pharmaceutical companies.
Early retirement programs are not figuring heavily in companies' plans at this time. Only 15 per cent of those surveyed indicate that they currently offer, or expect to offer, early retirement incentives; 80 per cent do not expect to utilize early retirement programs to manage workforce numbers.
Benefit programs tighten but remain intact
Few organizations are planning to make cuts to employee benefits. Eighty per cent intend to leave their medical, dental, and disability benefit plans unreduced. Some employers are even planning to expand their benefit programs. Benefits that improve employees' overall well-being and help them manage stress seem to be particularly popular, including health and wellness programs and coverage for paramedical services such as physiotherapy or massage therapy.
"In lean operations where every employee counts, companies need staff to contribute by staying healthy and engaged," says Rochelle Morandini, a senior organizational health consultant with Hewitt. "Employers understand that they need to support their employees in managing their stress and staying well, so that they can maintain productivity."
Certain other benefits will also remain intact or even be enhanced. "As far as benefits like employee recognition and loyalty programs, and training and development, it seems that the majority of employers view these programs as good ways to maintain engagement – employees' desire to stay with an organization and put in their best effort on the company's behalf," says Clarke. "Moreover, most of these programs do not cost a lot, as compared to other benefits, so it's money well spent from both the employees' and employer's perspective."
Most retirees and near-retirees are no more likely to be affected by tighter human resources budgets than others, according to the survey data. Only five per cent of respondents plan to cut retiree benefits, and even fewer plan to cut retirement contributions or member services. This is good news for older workers and current retirees whose retirement savings have been hard hit by the meltdown of the markets.
Many employers are looking to reduce their benefits costs where possible, primarily in ways that will have no direct impact on employees and their families. About 25 per cent will be seeking a reduction in benefit insurers' administration fees, commissions and outside supplier fees. Only about 11 per cent plan to cut internal pension and benefits support staff.
The biggest cuts will occur in business travel: 58 per cent of respondents plan to cut back either substantially or slightly. Holiday celebrations also seem to be on the wane, with ten per cent of organizations cutting back significantly this past season and a further 22 per cent cutting back slightly.
Communication is key
Despite widespread reports of the economic downturn, few organizations are dealing directly with the stress that may be caused by fears of cutbacks and layoffs. Over 35 per cent of employers are not planning any communication to employees about the situation or its impact on their workforce. Of those who do plan to communicate with employees about the economy, most organizations will discuss the business climate in general, rather than specifics about human resources strategies, pensions, benefits or compensation.
"Employer silence at this time may unnecessarily raise employee anxiety," says Morandini. "This is a perfect opportunity for organizations to reach out to employees to explain their approach, the actions they are taking to cope with the recession and their rationale. Clear communication will not only allay fears, it will help employees feel somewhat more in control, and even have further benefits such as getting employees on side and participating with cost-saving measures."
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