Drastic Moves by Organizations to Reduce Labor Costs

PHILADELPHIA–( BUSINESS WIRE)–The number of U.S. organizations decreasing overall staffing levels has nearly doubled in the past four months, according to management consulting firm Hay Group’s latest Reward in a Downturn Survey. When Hay Group conducted a similar study in November 2008, only 19% of U.S. respondents reported planning layoffs. However, only four months later, that number has jumped to 34% for U.S. respondents. Organizations are also turning to wage freezes and modest salary increase budgets to reduce labor costs. According to Hay Group’s survey, 37% of U.S. organizations have instituted a wage freeze for their employees – and more than half of U.S. respondents report their executives will receive no salary increase this year. A total of 2,000 organizations from 88 countries across six continents participated in Hay Group’s latest survey. “Organizations have been swift and decisive in their actions to reduce labor costs during these trying economic times,” said Tom McMullen, U.S. Reward Practice Leader for Hay Group. “When we conducted a similar study a year ago, only 16% of U.S. respondents expected their business results to be significantly worse than targeted levels. Today, that number has jumped to 40% for U.S. respondents, and we’re seeing organizations substantially tightening their belts as a result.” Hay Group’s survey also found that the impact of the downturn is indeed a global issue – significantly affecting high-growth economies in Asia, Eastern Europe and South America, as well as the more developed economies in North America and Europe within the past four months. Unlike Hay Group’s November survey, the percentage of organizations expecting business results to be worse than targeted or budgeted levels is now largely consistent around the globe. Other key findings from Hay Group’s Global Employee Pay and Staffing Survey: ( Read the entire release at BusinessWire.)

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