March 11, SHRM Poll: Financial Challenges to the U.S. & Global Economy and Their Impact on Organizations

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1 March 11, 2009 SHRM Poll: Financial Challenges to the U.S. & Global Economy and Their Impact on Organizations SHRM Poll March 20, 2009

& Global Economy in October 2008 and March 2009 In October 2008, SHRM conducted a series of polls which looked at the impact of the financial crisis on companies from a variety of

2 Introduction Six Months Later: A Comparison of the Financial Challenges to the U.S. & Global Economy in October 2008 and March 2009 In October 2008, SHRM conducted a series of polls which looked at the impact of the financial crisis on companies from a variety of angles. Six months later, in March 2009, an update of several of the poll questions was done to determine how the strategies of businesses are changing as the economy continues to decline. When possible, similar questions and response options are compared with one another in October 2008 and March Companies were also asked to project how their company is likely to proceed in the next six months assuming that the current financial challenges continue. 2

3 Please indicate whether each of the following have occurred in your organization within the past 6 months as a result of the financial challenges to the U.S. and global economy? March 2009 compared with October 2008 March 2009 (n=462) October 2008 (n=633) Budget cuts across the entire organization 71% -- Allowed attrition 63% 72% Implemented hiring freezes (no new hires) 52% 48% Froze employee wage increases 49% 3% Implemented layoffs 47% 48% Cut employee bonuses 44% -- Halted plans for business growth/expansion 42% -- Retrained employees for new positions in organization 34% 10% Did not renew contracts with existing contract/temporary, contingent workers 21% Reduced employees work hours with reduction in pay 20% 17% Note: Percentages do not total to 100% as respondents were allowed to select multiple response options. In October 2008, respondents indicated changes occurring in the past 12 months. Where possible, March 2009 data are compared with October 2008 data; A dash (--) indicates that this particular option was not asked in October

4 Please indicate whether each of the following have occurred in your organization within the past 6 months as a result of the financial challenges to the U.S. and global economy? (Continued) March 2009 compared with October 2008 March 2009 (n=462) October 2008 (n=633) Restructured executive compensation and/or executive severance packages (in addition to what may be specified in federal bailout legislation) 18% -- Outsourced certain business functions 16% -- Implemented salary reductions (without reduction in hours) 15% 5% Offered early retirement to employees 10% 6% Implemented employee furloughs for select employees without shutting down entire business Demoted employees to lower pay positions as a way to save money Hired more contract/temporary/contingent workers than usual 9% -- 9% -- 8% 12% Note: Percentages do not total to 100% as respondents were allowed to select multiple response options. In October 2008, respondents indicated changes occurring in the past 12 months. Where possible, March 2009 data are compared with October 2008 data; A dash (--) indicates that this particular option was not asked in October

5 Please indicate whether each of the following have occurred in your organization within the past 6 months as a result of the financial challenges to the U.S. and global economy? (Continued) March 2009 compared with October 2008 March 2009 (n=462) October 2008 (n=633) Offered job sharing 7% 5% My company has acquired or merged with another company 6% 9% Organization-wide work week reductions with no 6% -- reduction in pay Shut down business for short periods at a time without paying employees Introduced full-time telecommuting for employees to save on building and maintenance costs My company has been acquired by or merged with another company 5% 7% 4% -- 3% -- Note: Percentages do not total to 100% as respondents were allowed to select multiple response options. In October 2008, respondents indicated changes occurring in the past 12 months. Where possible, March 2009 data are compared with October 2008 data; A dash (--) indicates that this particular option was not asked in October

6 Please indicate whether each of the following have occurred in your organization within the past 6 months as a result of the financial challenges to the U.S. and global economy? Comparison by Organizational Sector Budget cuts across the entire organization: Publicly (FP) (80%) > NP (58%) Cut employee bonuses: Privately (FP) (50%) > NP (30%), Govt (21%) Implemented layoffs: Publicly (FP) (67%) > NP (26%), Govt (33%) Privately (FP) (50%) > Govt (33%) Allowed attrition of employees: Publicly (FP) (77%) > Privately (FP) (59%) Did not renew contracts with existing contract/temporary, contingent workers: Publicly (FP) (43%) > Govt (17%) Offered early retirement to employees: Publicly (FP) (21%), Govt (24%) > Privately (FP) (6%), NP (4%) Implemented salary reductions: Privately(FP) (20%) > NP (4%) Company has acquired or merged with another company: Privately(FP) (16%) > Publicly(FP) (2%), NP(1%) Note: Privately owned for profit organization = Private(FP) Publicly owned for-profit organization = Publicly(FP) Nonprofit organization = NP Government sector = Govt 6

7 Please indicate whether each of the following have occurred in your organization within the past 6 months as a result of the financial challenges to the U.S. and global economy? Comparison by Organizational Size Budget cuts across the entire organization: Large (80%) > Small (60%) Implemented layoffs: Large (59%) > Small (31%) Restructured executive compensation and/or executive severance packages (in addition to what may be specified in the federal bailout legislation): Large (28%) > Small (9%) Allowed attrition of employees: Large (76%) > Small (53%) Did not renew contracts with existing contract/temporary, contingent workers: Large (41%) > Small (18%), Medium (23%) Note: Small = 1-99 employees Medium = employees Large = 500 or more employees 7

8 Assuming the current financial challenges to the U.S. and global economy continue, what is the likelihood of each of the following to occur at your organization in the next 6 months? Budget cuts across the entire organization 8% 14% 35% 43% Allow attrition 14% 12% 34% 40% Implement hiring freezes (no new hires) 16% 19% 25% 40% Freeze employee wage increases 15% 22% 26% 37% Cut employee bonuses 20% 19% 30% 32% Implement layoffs 25% 25% 24% Halt plans for business growth/expansion 26% 20% Will not renew contracts with existing contract/temporary, contingent workers 35% 20% 19% Retrain employees for new positions in organization 26% 37% 10% Restructure executive compensation/severance packages (on top of specs in federal bailout) 46% 28% 17% 9% Implement salary reductions (without reduction in pay) 48% 29% 16% 8% Reduce employees work hours with reduction in pay 42% 31% 19% 7% Outsource certain business functions Note: (n=405) Percentages may not total 100% due to rounding. 38% 36% 20% 6% Not at all likely Somewhat unlikely 0% 10% Somewhat 20% 30% likely 40% Very 50% likely60% 70% 80% 90% 100% 8

9 Assuming the current financial challenges to the U.S. and global economy continue, what is the likelihood of each of the following to occur at your organization in the next 6 months? (Continued) Reduce employee benefits offerings 30% 35% 29% 5% Implement employee furloughs for select employees without shutting business down 58% 25% 12% 5% Offer early retirement to employees 61% 23% 12% 5% Organizationwide work week reductions with no reduction in pay 59% 28% 10% 4% Shut down business for short periods at a time without paying employees 71% 17% 7% 4% Offer job sharing 56% 26% 14% 4% Introduce full-time telecommuting for employees to save on building/maintenance costs 69% 23% 5% 3% Demote employees to lower pay positions as a way to save money 61% 28% 8% 3% Will hire more contract/temporary/contingent workers than usual 57% 14% 3% My company will acquire or merge with another company 73% 18% 7% 2% My organization will go out of business 83% 11% 5% 1% My company will be acquired by or merged with another company 81% 12% 6% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not at all likely Somewhat unlikely Somewhat likely Very likely Note: (n=405) Percentages may not total 100% due to rounding. 9

10 Has your organization reduced employee benefits offering within the past 6 months as a result of the financial challenges to the U.S. and global economy? 50% 40% 30% 20% 17% 10% 10% 0% Yes March 2009 (n=465) October 2008 (n=633) Note: In October 2008, respondents indicated changes occurring in the past 12 months. 10

11 What employees benefits offerings has your organization reduced, frozen or eliminated within the past 6 months due to the financial challenges to the U.S. and global economy? Health care coverage for employees 78% 22% 0% Health care coverage for spouse/dependents 72% 24% 3% The amount of employee leave carryover from one year to the next 57% 21% 21% Company-paid relocation programs 55% 30% 15% Defined contribution retirement savings plan employer match (e.g. 401(k)) 47% 32% 21% Paid time off (includes sick, vacation and personal days all in one plan) 44% 56% 0% Paid vacation time only 40% 60% 0% The amount of employee leave accruals/balances 35% 59% 6% Workplace flexibility benefits, e.g. telecommuting, compressed work weeks 33% 44% 22% Paid sick time only 31% 69% 0% Defined benefit pension plan 55% 18% Paid personal days only 73% 0% 0% 20% 40% 60% 80% 100% Reduced Frozen Eliminated completely Note: (n=47) Only respondents who indicated that their organization had reduced employee benefits answered this question. Reduced is defined as decreased scope of benefit offering and/or amount of benefit offering from prior levels). Frozen is defined as benefit offering still exists, but no additional funds are being invested, no new employees are eligible for benefit offering. Eliminated Completely is defined as the benefit no longer exists. Not applicable responses were excluded from this analysis. Percentages may not total 100% due to rounding. 11

12 Please identify if your company has made cuts in each of the following areas in the past 6 months? March 2009 compared with October 2008 Recruitment-related advertising, travel and relience on paid recruiters 51% 56% Morale and team-building activities 51% 57% Travel costs (excl. per diem) related to professional development 47% Professional development for employees 37% 44% Refreshments/snacks for employees 33% 36% Spot awards 16% 32% All staff training on general topics that are not specifically related to company's core business 28% 39% Reduction in per diem allowance for travel and entertainment 19% 26% Discretionary legal advice 13% 20% HR-related technology, (e.g., applicant tracking and payroll systems) 18% 23% Tuition reimbursement/education assistance 11% 18% Recruitment initiatives specifically related to increasing diversity of company's workforce 10% 18% Volunteer and philanthropic acitivities 16% 15% Diversity training 16% Fitness and stress management initiatives Environmental initiatives (e.g. recycling campaigns) 4% 8% 13% 13% March 2009 (n=403) October 2008 (n=633) Transit and parking subsidies 2% 6% 0% 10% 20% 30% 40% 50% 60% Note: In October 2008, respondents selected the top five changes that occurred in the past 12 months. Percentages do not total to 100% as respondents were allowed to select multiple response options. Not applicable responses were excluded from this analysis. Where possible, March 2009 data are compared with October 2008 data. 12

13 Please identify if your company has made cuts in each of the following areas in the past 6 months? Comparison by Organizational Sector & Size Morale and team building activities, including company picnics and holiday parties: Publicly(FP) (63%) > NP (34%) Large (62%) > Small (34%) Diversity training: Private(FP) (23%) > NP (6%) Travel costs (excluding per diem) related to professional development: Large (65%) > Small (35%), Medium (39%) Recruitment related advertising, travel and raliance on paid recruiters: Large (74%) > Small (42%), Medium (50%) Note: Privately owned for profit organization = Private(FP) Publicly owned for-profit organization = Publicly(FP) Nonprofit organization = NP Government sector = Govt Small = 1-99 employees (n=56) Medium = employees (n=102) Large = 500 or more employees (n=100) 13

14 Assuming the current financial challenges to the U.S. and global economy continue, what is the likelihood of each of the following areas to experience cuts in the next 6 months, if they have not already been cut? Recruitment-related advertising, travel and relience on paid recruiters Travel costs (excl. per diem) related to professional development Morale and team-building activities Refreshments/snacks for employees Spot awards Fitness and stress management initiatives Professional development for employees Reduction in per diem allowance for travel and entertainment Recruitment initiatives specifically related to increasing diversity of company's workforce Transit and parking subsidies All staff training on general topics that are not specifically related to company's core Tuition reimbursement/education assistance Discretionary legal advice HR-related technology, e.g., applicant tracking and payroll systems Diversity training Volunteer and philanthropic acitivities Environmental initiatives (e.g., recycling campaigns) 24% 16% 26% 35% 25% 22% 22% 20% 32% 26% 29% 26% 21% 24% 36% 17% 24% 23% 41% 22% 16% 21% 23% 29% 29% 19% 28% 29% 25% 19% 36% 18% 19% 56% 19% 7% 18% 28% 29% 24% 18% 36% 23% 23% 18% 41% 15% 16% 38% 29% 18% 15% 42% 26% 18% 13% 42% 18% 13% 50% 30% 9% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not at all likely Somewhat unlikely Somewhat likely Very likely Note: (n=369) Percentages may not total 100% due to rounding. 14

15 Demographics: Organizational Industry Industry Manufacturing - other 14% Services - professional, scientific, technical, legal, engineering 9% Health care, social assistance (e.g. nursing homes, EAP providers 9% Financial services (e.g. banking) 8% Retail/wholesale trade 5% Educational services/education 5% Other services (e.g. non-profit, church/religious organizations) 5% Construction, mining, oil & gas 4% Government/public administration - federal, state/local, tribal 4% High-tech 4% Insurance 4% Consulting 4% Note: (n=391) Percentages may not total 100% due to rounding. 15

16 Demographics: Organizational Industry (Continued) Industry Utilities 3% Telecommunications 2% Transportation, warehousing (e.g. distribution) 2% Services - accommodation, food & drinking places 2% Manufacturing - auto/auto related 2% Real estate, rental, leasing 2% Publishing, broadcasting, other media 2% Association - professional/trade 1% Arts, entertainment, recreation 1% Biotech 1% Other 8% Note: (n=391) Percentages may not total 100% due to rounding. 16

17 Demographics: Organization Size Note: (n=290) 17

18 Demographics: Organizational Sector Privately owned for-profit 50% Publically owned for profit 22% Nonprofit organization 20% Government sector 9% 0% 10% 20% 30% 40% 50% 60% Note: (n=384) Percentages may not total 100% due to rounding. 18

19 Demographics: Organization s Business Scope Primarily nationally based (i.e., business operations, employees and/or customers primarily within the U.S.) 43% Primarily locally based (i.e., business operations, employees and/or customers primarily within a city/town) 20% Primarily state-based (i.e., business operations, employees and/or customers primarily within a state) 20% Primarily multinationally based (i.e., business operations, employees, and/or customers outside of the U.S.) 13% Other 4% 0% 10% 20% 30% 40% 50% Note: (n=388) 19

20 Demographics: Unionized Workplace 90% 85% 80% 70% 60% 50% 40% 30% 20% 15% 10% 0% Yes No Note: (n=390) The average percent of unionized employees at locations with a unionized workplace is 50%. 20

21 SHRM Poll: Financial Challenges to the U.S. & Global Economy and Their Impact on Organizations Methodology Response rate = 17% Sample comprised on 467 randomly selected HR professionals from SHRM s membership Margin of error is +/- 4 Survey fielded the week of March 12,

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