shrm poll economy_spring10_final

June 7, 2010

SHRM Poll: Financial Challenges to the U.S. and Global Economy and Their Impact on Organizations—Spring 2010 Update

Financial Challenges – Spring 2010 Update| ©SHRM 2010

Introduction

A Comparison of the Financial Challenges to the U.S. and Global Economy poll data from October 2008, March 2009, October 2009 and March 2010.

• In October 2008, SHRM conducted a series of polls that looked at the impact of the financial crisis on companies from a variety of angles. Several of the poll questions were updated in March 2009, October 2009 and March 2010 to determine how business were adjusting their strategies in response to changes in the economy.

• When possible, similar questions and response options from October 2008, March 2009, October 2009 and March 2010 are compared with one another.

• Respondents 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


Changes Organizations Made Within the Past Six Months as a Result of the Financial Challenges to the U.S. and Global Economy

3


Please indicate whether each of the following have occurred in your organization within the PAST SIX MONTHS as a result of the financial challenges to the U.S. and global economy.

4

Note: In October 2008, respondents indicated changes occurring in the past 12 months. Where possible, March 2010 data are compared with October 2009, March 2009 and October 2008 data; a dash (--) indicates that this particular question was not asked in October 2008.

March 2010

(n = 414)

October 2009

(n = 371)

March 2009

(n = 462)

October 2008

(n = 633)

Made budget cuts across the entire organization 67% 73% 71% --

Allowed attrition 65% 63% 63% 72%

Froze employee wage increases 52% 54% 49% 3%

Cut employee bonuses 46% 48% 44% --

Implemented layoffs 43% 52% 47% 48%

Retrained employees for new positions in organization 43% 42% 34% 10%

Implemented hiring freezes (no new hires) 39% 42% 52% 48%

Halted plans for business growth/expansion 32% 37% 42% --

Did not renew contracts with existing contract/temporary/ contingent workers 30% 33% 27% 21%

Outsourced certain business functions 20% 20% 16% --

Hired more contract/temporary/contingent workers than usual 19% 16% 8% 12%

Reduced employee work hours with reduction in pay 18% 18% 20% 17%

March 2010 Compared With October 2009, March 2009 and October 2008


Please indicate whether each of the following have occurred in your organization within the PAST SIX MONTHS as a result of the financial challenges to the U.S. and global economy (continued).

5

March 2010

(n = 414)

October 2009

(n = 371)

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) 13% 15% 18% --

Implemented salary reductions (without reduction in hours) 11% 15% 15% 5%

Offered early retirement to employees 10% 10% 10% 6%

Implemented employee furloughs for select employees without shutting down entire business 10% 10% 9% --

Demoted employees to lower-pay positions as a way to save money 9% 12% 9% --

Offered job sharing 9% 7% 7% 5%

Acquired or merged with another company 9% 6% 6% 9%

Shut down business for short periods of time without paying employees 7% 8% 5% 7%

Introduced full-time telecommuting for employees to save on building and maintenance costs 6% 6% 4% --

Reduced organization wide workweek with no reduction in pay 5% 7% 6% --

Had been acquired by or merged with another company 3% 2% 3% --

Note: In October 2008, respondents indicated changes occurring in the past 12 months. Where possible, March 2010 data are compared with October 2009, March 2009 and October 2008 data; a dash (--) indicates that this particular question was not asked in October 2008.



Please indicate whether each of the following have occurred in your organization within the PAST SIX MONTHS as a result of the financial challenges to the U.S. and global economy.

• Retrained employees for new positions in organization: Public owned for-profit organizations (60%) were more likely to report retraining employees for new positions in their organization than were privately owned for -profit (40%) organizations. Medium-staff-sized organizations (49%) also were more likely to report retraining employees for new positions in their organization than were small-staff-sized organizations (32%).

• Allowed attrition: Large- (76%) and medium-staff-sized organizations (67%) were more likely to report that they allowed attrition than were small-staff-sized organizations (48%).

• Did not renew contracts with existing contract/temporary/contingent workers : Large-staff-sized organizations (40%) were more likely to report that they did not renew contracts with existing contract/temporary/contingent workers compared with medium-staff-sized organizations (23%).

6

Comparison by Organization’s Sector and Staff Size


Has your organization reduced employee benefits offerings within the PAST SIX MONTHS as a result of the financial challenges to the U.S. and global economy?

March 2010 (n = 397) October 2009 (n = 339) March 2009 (n = 465) October 2008 (n = 633)0%

10%

20%18%

19%17%

10%

Yes

7

Note: In October 2008, respondents indicated changes occurring in the past 12 months.


What employee benefits offerings has your organization reduced, frozen or eliminated within the PAST SIX MONTHS due to the financial challenges to the U.S. and global economy? (March 2010)

Paid personal days only

Paid sick time only

Paid vacation time only

Defined benefit pension plan

Workplace flexibility benefits (e.g., telecommuting, flex time, compressed workweeks)

Employer match to the defined contribution retirement savings plan (e.g., 401 (k))

Paid time off (includes sick, vacation and personal days all in one plan)

The amount of employee leave carryover from one year to the next

The amount of employee leave accruals/balances

Company-paid relocation programs

Health care coverage for spouses/dependents

Health care coverage for employees

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

13%

15%

27%

38%

46%

48%

53%

53%

56%

70%

70%

75%

74%

77%

67%

48%

36%

33%

40%

40%

36%

23%

26%

23%

13%

8%

6%

14%

18%

20%

7%

7%

8%

7%

4%

2%

Reduced Frozen Eliminated completely

8

Note: n = 72. Only respondents who indicated that their organizations had reduced employee benefits answered this question. “Reduced” is defined as “decreased scope and/or amount of benefits offerings from prior levels.”“Frozen” is defined as “benefits offering still exists, but no additional funds are being invested, no new employees are eligible for the benefit.”“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.

Of the 18% of companies that reduced benefits offerings:


What employee benefits offerings has your organization reduced within the PAST SIX MONTHS due to the financial challenges to the U.S. and global economy?

9

March 2010

(n = 72)

October 2009

(n = 46)

March 2009

(n = 47)

Health care coverage for employees 75% 85% 78%

Health care coverage for spouses/dependents 70% 84% 72%

Company-paid relocation programs 70% 58% 55%

The amount of employee leave accruals/balances 56% 64% 35%

The amount of employee leave carryover from one year to the next 53% 59% 57%

Paid time off (includes sick, vacation and personal days all in one plan) 53% 47% 44%

Employer match to defined contribution retirement savings plan (e.g., 401 (k)) 48% 67% 47%


46% 70% 33%

Defined benefit pension plan 38% 33% 27%

Paid vacation time only 27% 14% 40%

Paid sick time only 15% 29% 31%

Paid personal days only 13% 13% 27%

Note: Table represents “reduced” responses.

March 2010 Compared With October 2009 and March 2009

Financial Challenges – Spring 2010 Update| ©SHRM 2010 10

March 2010

(n = 314)

October 2009

(n = 341)

March 2009

(n = 403)

October 2008

(n = 633)

Travel costs (excluding per diem) related to professional development* 52% 58% 47% -

Morale- and team-building activities 45% 49% 51% 57%

Recruitment-related advertising, travel and reliance on paid recruiters 35% 47% 56% 51%

Professional development for employees 34% 37% 37% 44%

Reduction in per diem allowance for travel and entertainment 28% 23% 26% 19%

Refreshments/snacks for employees 27% 32% 33% 36%

All-staff training on general topics that are not specifically related to company's core business 24% 28% 28% 39%

Spot awards 23% 30% 32% 16%

HR-related technology (e.g., applicant tracking and payroll systems) 14% 14% 18% 23%

Tuition reimbursement/education assistance 14% 20% 18% 11%

Discretionary legal advice 13% 15% 20% 13%

Volunteer and philanthropic activities 12% 13% 16% 15%

Recruitment initiatives specifically related to increasing diversity of company's workforce 12% 15% 18% 10%

Fitness and stress management initiatives 12% 16% 13% 13%

Environmental initiatives (e.g., recycling campaigns) 8% 6% 8% 4%

Transit and parking subsidies 7% 7% 6% 2%

Please identify if your company has made cuts in each of the following areas in the PAST SIX MONTHS.March 2010 Compared With October 2009, March 2009 and October 2008

Note: In October 2008, respondents selected the top five changes that occurred in the past 12 months. Percentages do not total 100% as respondents were allowed to select multiple response options.“Not applicable” responses were excluded from this analysis. Where possible, March 2010 data are compared with October 2009, March 2009 and October 2008 data. * indicates that this particular option was not asked in October 2008.


Actions Organizations Are Likely to Take in the Next Six Months, Assuming the Current Financial Challenges to the U.S. and Global Economy Continue

11


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 SIX MONTHS?

Implement employee furloughs for select employees without shutting down entire business

Restructure executive compensation/severance packages

Outsource certain business functions

Reduce employee benefits offerings

Retrain employees for new positions in organization

Halt plans for business growth/expansion

Implement layoffs

Not renew contracts with existing contract/temporary/contingent workers

Implement hiring freezes (no new hires)

Cut employee bonuses

Make budget cuts across entire organization

Allow attrition

Freeze employee wage increases

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

66%

44%

36%

35%

21%

33%

32%

23%

23%

20%

16%

18%

22%

22%

36%

31%

34%

30%

34%

33%

29%

29%

28%

26%

18%

26%

8%

15%

27%

25%

39%

21%

22%

30%

28%

32%

38%

41%

27%

4%

5%

6%

6%

10%

12%

13%

18%

20%

20%

20%

23%

25%

Not all likely Somewhat unlikely Somewhat likely Very likely

12

Note: n = 384. Percentages may not total 100% due to rounding.


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 SIX MONTHS? (continued)

Go out of business

Introduce full-time telecommuting for employees to save on building and maintenance costs

Demote employees to lower-paying positions as a way to save money

Be acquired or merge with another company

Reduce organizationwide workweek with no reduction in pay

Offer job sharing

Shut down business for short periods of time without paying employees

Reduce employee work hours with reduction in pay

Implement employee furloughs for select employees without shutting down entire business

Offer early retirement to employees

Implement salary reductions (without reductions in hours)

Acquire or merge with another company

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

86%

75%

61%

79%

68%

56%

70%

59%

66%

61%

54%

70%

11%

17%

29%

13%

22%

29%

19%

27%

22%

26%

32%

13%

3%

6%

8%

6%

7%

11%

7%

10%

8%

8%

9%

11%

0%

2%

2%

2%

3%

4%

4%

4%

4%

5%

5%

6%


13Note: n=384. Percentages may not total 100% due to rounding.


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 SIX MONTHS?

14

March 2010

(n = 387)

October 2009

(n = 371)

March 2009

(n = 462)

October 2008

(n = 633)

Freeze employee wage increases 25% 33% 37% 18%

Allow attrition 23% 29% 40% --

Make budget cuts across entire organization 20% 34% 43% 32%

Cut employee bonuses 20% 32% 32% 21%

Implement hiring freezes (no new hires) 20% 23% 40% 26%

Not renew contracts with existing contract/temporary/contingent workers 14% 18% 19% --

Implement layoffs 13% 21% 24% 16%

Halt plans for business growth/expansion 12% 16% 20% --

Retrain employees for new positions in organization 10% 13% 10% --

Hire more contract/temporary/contingent workers than usual 9% 5% 3% --

Reduce employee benefits offerings 6% 13% 5% --

Outsource certain business functions 6% 9% 6% 3%

Implement salary reductions (without reductions in hours) 5% 6% 8% --

Note: Table represents “very likely” responses. In October 2008, respondents indicated changes occurring in the next 12 months. Where possible, March 2010 data are compared with October 2009 , March 2009 and October 2008 data; a dash (--) indicates that this particular question was not asked in October 2008.



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 SIX MONTHS? (continued)

15

March 2010

(n = 387)

October 2009

(n = 371)

March 2009

(n = 462)

October 2008

(n = 633)

Acquire or merge with another company 5% 6% 2% --

Offer early retirement to employees 5% 6% 5% --

Reduce employee work hours with reduction in pay 4% 6% 7% --

Shut down business for short periods of time without paying employees 4% 6% 4% --

Restructure executive compensation/severance packages 4% 8% 9% 5%

Implement employee furloughs for select employees without shutting down entire business 4% 8% 5% --

Reduce organizationwide workweek with no reduction in pay 3% 5% 4% --

Be acquired or merged with another company 2% 4% 1% --

Offer job sharing 4% 4% 4% --

Demote employees to lower-paying positions as a way to save money 2% 3% 3% --

Introduce full-time telecommuting for employees to save on building and maintenance costs 2% 3% 3% --

Go out of business 1% 2% 1% --


Note: Table represents “very likely” responses. In October 2008, respondents indicated changes occurring in the next 12 months. Where possible, March 2010 data are compared with October 2009 , March 2009 and October 2008 data; a dash (--) indicates that this particular question was not asked in October 2008.


Assuming the current financial challenges to the U.S. and global economy continue, which employee benefits offerings is your organization likely to reduce, freeze or eliminate in the NEXT SIX MONTHS?

Paid sick time only

Paid vacation time only

Paid personal days only

Company-paid relocation programs

The amount of employee leave carryover from one year to the next


Paid time off (includes sick, vacation and personal days all in one plan)

The amount of employee leave accruals/balances

Employer match to the defined contribution retirement savings plan (e.g., 401 (k))

Defined benefit pension plan

Health care coverage for employees

Health care coverage for spouses/dependents

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

23%

32%

39%

44%

47%

51%

52%

53%

56%

61%

79%

81%

77%

68%

61%

46%

46%

46%

48%

44%

34%

39%

20%

18%

0%

0%

0%

10%

7%

3%

0%

3%

9%

0%

1%

1%

Reduce Freeze Eliminate completely

16

Note: n = 52.Only respondents who indicated that their organizations were likely to reduce employee benefits answered this question. “Reduce” is defined as “decreased scope and/or amount of benefits offerings from prior levels.”“Freeze” is defined as “benefits offering still exists, but no additional funds are being invested, no new employees are eligible for the benefit.”“Eliminate 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.

Of the 31% of companies that indicated they were likely (“very likely” or “likely”) to reduce benefits offering in the next six months:


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 SIX MONTHS, if they have not already been cut?

Discretionary legal advice

HR-related technology (e.g., applicant tracking and payroll systems)

Environmental initiatives

All-staff training on general topics that are not specifically related to company's core business

Recruitment initiative specifically related to increasing diversity of your workforce

Professional development for employees

Volunteer and philanthropic activities

Tuition reimbursement/education assistance

Refreshments/snacks for employees

Per diem allowance for travel and entertainment

Fitness and stress management initiatives

Travel costs (excluding per diem) related to professional development

Spot awards

Recruitment-related advertising, travel and reliance on paid recruiters

Morale- and team-building activities

Transit and parking subsides

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

41%

42%

44%

35%

42%

29%

45%

44%

35%

27%

43%

23%

36%

30%

25%

46%

37%

33%

33%

29%

29%

30%

28%

24%

30%

29%

24%

26%

26%

24%

27%

18%

15%

17%

15%

27%

17%

28%

14%

18%

20%

28%

17%

34%

19%

27%

28%

12%

7%

8%

9%

9%

12%

13%

13%

14%

15%

16%

16%

17%

19%

19%

20%

24%


17Note: n = 356. Percentages may not total 100% due to rounding.


Within the PAST SIX MONTHS, has your organization hired back any employees who were previously laid off due to the financial challenges to the U.S. and global economy?

October 2009 (n = 288)

March 2010 (n = 211)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

70%

55%

30%

45%

No, we have not rehired employees who were laid off Yes, we've rehired employees who were laid off

18Note: n = 288


Demographics: Organization Industry

Industry

Manufacturing 18%

Health care, social assistance (e.g., nursing homes, EAP providers) 13%

Services—professional, scientific, technical, legal, engineering 8%

Educational services/education 6%

Financial services (e.g., banking) 6%

Other services (e.g., nonprofit, church/religious organizations) 5%

Retail/wholesale trade 5%

Transportation, warehousing (e.g., distribution) 5%

Insurance 5%

Construction, mining, oil and gas 4%

19

Note: n = 367. Percentages may not total 100% due to rounding.


Demographics: Organization Industry (continued)

Industry

Government/public administration—federal, state/local, tribal 4%

Consulting 4%

High-tech 3%

Arts, entertainment, recreation 3%

Utilities 3%

Services—accommodation, food and drinking places 2%

Telecommunications 2%

Association—professional/trade 1%

Publishing, broadcasting, other media 1%

Pharmaceutical 1%

Real estate, rental, leasing 1%

20

Note: n=367. Percentages may not total 100% due to rounding.


Demographics: Organization Sector

Other

Government sector

Publicly owned for-profit organization

Nonprofit organization

Privately owned for-profit organization

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1%

5%

19%

23%

52%

21

Note: n= 365


Demographics: Organization Staff Size

Small (1-99 employees) Medium (100-499 employees) Large (500 or more employees)0%

10%

20%

30%

40%

50%

28%

40%

32%

22

Note: n = 300


Demographics: Organization Region

Northeast

West

South

Midwest

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

17%

25%

28%

30%

23

Note: n = 306


Demographics: Organization Operations Location

Primarily nationally based

Primarily state-based Primarily locally based Primarily multinationally based

0%

10%

20%

30%

40%

50%45%

18%20%

17%

24

Note: = 362


SHRM Poll: Financial Challenges to the U.S. and Global Economy and Their Impact on Organizations – Spring 2010 Update

• Response rate = 16%• Sample comprised of 419 randomly selected HR

professionals from SHRM’s membership• Margin of error is +/- 5 • Survey fielded March 30 - April 13, 2010

25

Methodology

shrm poll economy_spring10_final

Education

sized organizations

changes organizations

current financial challenges

global economy poll

organizations sector

actions organizations

financial crisis

reduced employee benefits