FOR IMMEDIATE RELEASE
Employment Market to Stay Tight in 2010 Despite Modest Plans to Unfreeze or Increase Hiring, Says Towers Perrin Research
Despite Lengthy Contraction, Nearly Three-Quarters of Companies Concerned About Retaining Critical Talent as Labor Market Thaws
STAMFORD, CT, December 3, 2009 — Despite signs of modest recovery in the broader economy, many employers plan to maintain a conservative stance well into 2010, with 31% of those polled in a recent Towers Perrin survey indicating they plan to reduce head count on a targeted basis in the coming year and another 6% planning for a significant reduction in staff. While these results are improved over 2009 reports (42% and 35%, respectively), they reflect a continued level of concern among America’s businesses on the speed of recovery from the recent recession.
In contrast to this projected employment contraction, 21% of the companies surveyed actually plan to increase hiring in the coming year, compared with just 3% that did so in 2009. In addition, 16% of companies that froze or reduced hiring in 2009 are planning to increase hiring next year. At the same time, companies are also expressing increased concern about keeping their critical talent as the recovery picks up steam and jobs become more available to top performers.
While the final unemployment report of the year is yet to come from the Bureau of Labor Statistics, this research indicates a mixed outlook on the coming year for businesses, employees and job hunters in all sectors.
"While we're encouraged by the optimism we're seeing from some employers, this latest research doesn’t indicate a steady recovery in the unemployment market in 2010," said Ravin Jesuthasan, Towers Perrin Managing Principal. "For now, it appears that the number of organizations continuing on with the 'hunker down' mentality of 2009 will be significant, and limit any workplace gains we were hoping for in 2010."
In fact, while many indicators are showing year-over-year improvements, questions remain in the minds of many as to whether leaders should be looking toward growth or battening down the hatches for a double-dip recession. For instance, the number of companies that plan to freeze or reduce hiring dropped nearly 50% — from 65% in 2009 to 33% in 2010. Yet, at the same time, 17% of companies will institute or continue a salary freeze into next year; 11% will increase their reliance on contract workers, and 26% will cut back on overtime. Adding to these murky waters is the growing concern among leadership over the prospect of employee turnover.
A Coming Talent War
While it appears hiring may see a modest uptick in 2010, significant concern is brewing in organizations about losing key talent. Specifically, 70% of companies reported that they are very or somewhat concerned that high-performing employees may leave as a result of actions the company has taken in response to the financial crisis, up from 62% expressing such concerns this year.
"Companies need to have a sharp focus on their pivotal employees right now," said Jesuthasan. "A lot has happened over the past year; employees have had their pay frozen or reduced; some have seen their bonuses disappear, and many have watched their friends and colleagues suffer through layoffs. When the economy turns, this critical talent may well remember the actions their company took during the downturn and make the decision to leave."
The survey also confirms that few organizations are willing to let their talent walk away, even in a still-tenuous economy, and are ready to use their resources proactively to ensure those top performers stay on board, engaged and productive. Among the chosen approaches are salary increases (49%), cash retention awards (32%), stock retention awards (26%), and higher bonus payouts (25%).
Towers Perrin's most recent compensation and hiring research was conducted online in late October 2009 as part of a series of ongoing surveys to gain insight on how organizations are responding to the economic turmoil and balancing key talent and cost objectives. The survey focused on the changes companies have made in 2009 or are planning for 2010 in light of current economic trends, including changes in compensation, retention of high performers, implications for annual and long-term incentives, and other workforce issues. In total, 333 respondents provided information on their U.S. operations.
About Towers Perrin
Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, insurance and reinsurance intermediary services, and actuarial consulting. Towers Perrin has offices and alliance partners in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia, New Zealand and the Middle East. More information about Towers Perrin is available at www.towersperrin.com.