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Overtime Primer: Highlights from the New Regulations
The federal DOL overtime regulations go into effect this year. Are you ready?
This report includes a summary of key changes, including the salary level test and salary basis test.
As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.
March 21, 2001
Poll: Companies in Belt-Tightening Mode
Few of the respondents expressed optimism about the economy and 43 percent went so far as to say that a recession is already here, according the poll conducted by Challenger, Gray & Christmas, Inc.
Despite concerns about the economy, only one in seven reported that the economy was impacting hiring decisions. Companies polled seem to be taking the economic slowdown in stride. There definitely was no panic in the voices of the human resource executives interviewed, but there was a clear sense of urgency that the time has come for much more budget-conscious spending. The belt tightening mode that seems to dominate corporate thinking will eventually impact vendors and services, observed John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Challenger noted that worries about the economy may also lead to lower turnover, since workers are less apt to leave a job voluntarily in times of economic uncertainty. Fourteen percent of the human resource executives polled reported that turnover had decreased since December.
"You are not going to see people jumping from job to job the way you did when the economy was firing on all pistons, since the number of available jobs decreases along with a person's confidence that he or she can find one that pays more or offers more job security," Challenger said.
"Workers understand that the risk of being discharged is actually greater for new people, since many employers take a 'last hired, first fired' approach to downsizing," he said.
Wausau-Mosinee Paper Company, Wausau, Wisconsin, was among the companies reporting that the shift in the economy is forcing it to scrutinize all costs. Stuart Carlson, senior vice president of human resources, noted that the company is trying to limit overtime and, while a hiring freeze has not been instituted, it is closely examining the merits of every individual hiring request.
"Each business unit must submit plans outlining its hiring needs. Now we require that business units present, in person, justification for each additional employee. So far, none of the hiring requests has been approved," Carlson said.
Some human resource executives downplayed the impact that the economy is having on their operations. The director of human resources for a mining company noted that things are going really well for his company, which has plans to build several new mining rigs over the next few years.
Kent Strueling, vice president of human resources at America First Credit Union, said that their company has not been impacted as heavily as others by the faltering economy and is in fact growing. However, he also said that the economic slowdown has prompted tighter budgetary control.
"We are now making sure that budget increases do not exceed overall growth. It used to be that we would grow the business by 10 percent but increase our budget 20 percent. Now, if we grow 10 percent, our budget will only go up 10 percent."
Strueling also noted that the Riverdale, Utah, company has reevaluated the way in which salary increases are awarded. Pay raises are now based less on how much time the person has been with the company and more on how much he or she has contributed.
A representative from a Midwest manufacturer of airplane components expressed confidence that its business plan would help them through any rough patches. He said the company was beginning to tighten its belt, looking across the entire budget for places to cut back.
For example, research and development was one area that would be examined closely to determine what projects can be pushed back or eliminated. However, he said that none of the budget cutbacks would affect employees in terms of dismissals or cuts in benefits or perks.
Despite the effort to minimize the impact of the slowdown on employees, as indicated by several of the human resource executives, many admit that the changes in the workplace have not escaped the eyes of workers and that there is slightly more anxiety about job security as well as their own personal financial situation.
"Even if companies go out of the way to reassure employees that their jobs are safe and that their medical benefits will not be reduced, it is still difficult for people to remain confident when signs of increasing uncertainty dominate the news," said Challenger.
"Within their own company, employees are most likely aware of slower sales or industry consolidation. You can be certain that many workers are growing increasingly worried about their jobs, regardless of the assurances from their employers to the contrary."
Perhaps the most dramatic sign of workers' growing concern over the economy and job security comes from Wausau-Mosinee Paper Company, where union workers signed the first contract offer by their employer.
"Typically, the contract goes back and forth between the union and the company several times before the contract is agreed upon," Stuart Carlson told Challenger researchers.
Carlson attributed the signing to the realization among workers that the contract offered is most likely the best they were going to get considering that the economy could further decline.
The Challenger telephone survey was conducted from among 200 human resource professionals in a wide range of industries throughout the country.
elephone poll of human resource executives found that 71 percent of companies are taking unannounced belt-tightening measures as a result of the shift in the economy.