WASHINGTON, D.C., October 28, 2009 — 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 update to an ongoing series of surveys by Watson Wyatt, a leading global consulting firm. Nevertheless, employers remain concerned about their ability, both currently and in the long run, to attract and retain critical-skill employees.
According to the survey, more than half (54 percent) of employers that froze salaries plan to unfreeze them within the next six months, a sharp increase from 33 percent in August and 17 percent in June. Almost half (49 percent) also plan to reverse hiring freezes at least partially in the next six months, compared with 38 percent two months ago.
The survey also found that an increasing number of employers are planning to reverse reductions to 401(k) match contributions in the next six months – this number has increased to 35 percent, from 24 percent two months ago and only 5 percent in June. Overall, 56 percent of companies have instituted a salary freeze and a hiring freeze since the economic crisis began, and 25 percent 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," said 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 (96 percent) have made offers to new hires in the past three months, and the vast majority (93 percent) anticipate making offers in the next three months. However, approximately one-fifth still anticipate making layoffs in the remainder of 2009 or in 2010. In addition, almost two-thirds (65 percent) 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 (50 percent) of employers expect an increase in difficulty in attracting critical-skill employees, and 55 percent 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 8 percent 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," said 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:
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About Watson Wyatt
Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the worlds leading organizations on people and financial issues. The firms global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 33 countries and is located on the Web at http://www.watsonwyatt.com.