Despite Economic Uncertainty, Towers Perrin Survey Shows Companies Focused on Growth and Retaining, Developing Key Talent

Stamford, CT, April 22, 2008 — Most U.S. companies believe they are reasonably well prepared to adapt to the challenges of the current economic environment, according to results of a new Towers Perrin pulse survey.  In fact, the majority anticipate their key priorities for 2008 will combine positioning for growth with enhanced operational efficiencies.  Equally significant, few are currently planning unilateral, across-the-board cuts.

The survey, 2008 Business and Workforce Challenges, polled more than 430 human resource executives in the United States in February 2008 on their organization’s business priorities and workforce plans in light of current economic uncertainties and financial constraints.  Specifically, the results show that, while 90% of respondents are "somewhat to very concerned" about the economy's impact on business performance, only 11% foresee a large-scale reduction in the workforce as very likely.  Further, the survey found that, while organizations are streamlining and optimizing costs, they are not doing so at the expense of growth-focused investment.  Respondents cite strategic growth initiatives as among the most likely areas of emphasis in 2008, with companies planning to expand into new product or service lines (56%) or new global markets (40%), and pursue small to medium acquisitions or mergers (36%).

"The results of this survey show a nuanced shift in fundamental organizational thinking since the last economic down cycle" said Max Caldwell, managing principal at Towers Perrin. "Companies seem to understand that, while they may realize short-term gains from across-the-board cuts, these benefits often come with long-term consequences that may take years to recover from, in terms of lost talent, reduced morale and employee engagement."

Interestingly, while organizations report an enhanced focus on growth, the human resource function’s readiness to manage that priority appears to be mixed, according to the survey results.  A majority of respondents believe they are "very prepared" to undertake transactional activities such as expense reduction or small-scale workforce cuts (50% and 64%, respectively). But far fewer believe the HR function is ready to act when it comes to more strategic and growth-focused initiatives.  About one-quarter of the respondents, for example, feel "very prepared" to handle a large-scale M&A deal (27%), or support expansion into new global markets (28%) or new product or service lines (41%). 

"Human resource organizations have been in a state of rapid growth and transformation in recent years," said Caldwell.  "Though the function has been improved significantly with new technology and processes over the past few years, many human resource departments are still in the midst of this transformation and may not have the 'bandwidth' to effectively absorb and act on additional challenges presented by the current environment."

About Towers Perrin

Towers Perrin is a global professional services firm that helps organizations improve their 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, reinsurance intermediary services and actuarial consulting.  Towers Perrin has offices and alliance partner locations in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia and New Zealand.  More information about Towers Perrin is available at www.towersperrin.com.