Opportunity Management
As the impact of the global economic crisis takes hold, a quarter of large U.S. employers say they expect to make layoffs in the next 12 months. However, most companies are focusing on increased employee communication and smaller cost-saving measures, according to a survey by Watson Wyatt, a global consulting firm.
The steps being taken by large corporations surveyed by Watson Wyatt dovetail with what Main Street independent insurance agency owners say they are doing to cope with the financial crisis. Agents are less inclined to halt their hiring but they are busy cutting unnecessary spending, according to an online survey by Insurance Journal (www.insurancejournal.com).
All businesses, big and small, appear to be taking measured rather than extreme approaches to the crisis. They are taking several steps, not just one, to balance the needs of their customers and employees and with financial reality going forward.
“Employers are still sorting out the impact of the economic crisis, but changes are clearly in the wind,” said Paul Platten, global practice director of Watson Wyatt’s human capital group. “As they respond to the new environment, companies will have to balance how to control costs, maintain employee morale and prepare for future staffing challenges.”
According to the Watson Wyatt survey of 248 companies conducted in mid-October, roughly one of four is planning layoffs (26 percent), hiring freezes (25 percent) or raising employee contributions to health care plans (25 percent).
While some companies surveyed by Watson Wyatt also plan other changes, including travel restrictions, restructuring and reductions in training, relatively few expect to freeze salaries, reduce 401(k) matches or freeze or close their pension plan.
According to the Watson Wyatt survey, almost three out of 10 large employers (28 percent) have reduced their merit pay budgets in the wake of recent financial developments. Of those employers that reduced their budgets, the projected raise is now 2.5 percent for 2009, down from 3.7 percent.
According to the Insurance Journal survey of 125 independent agencies, a hiring or salary freeze is the least considered option at this stage. Only 15 percent have instituted such plans.
But 22 percent of agents responding said they have cut unnecessary spending while the same percentage has taken steps to communicate more with their customers.
Fewer than 1 out of 10 — in fact only 9 percent of agents — said they have taken no steps and continue with business-as-usual.
But true to their entrepreneurial spirit, independent agents are not just looking to cut, scrimp and save. They are equally focused on new opportunities. Another 22 percent say they are exploring new sources of revenue to help them weather the crisis.
If any business owners can find opportunity in this financial mess, independent agents can. It won’t be easy but they’re in the business of helping people — even their own employees — survive catastrophes.