The February blahs take on a deeper dimension as companies tighten their belts in a tough economy.
Most of us weren’t sorry to see the end of 2008—a year that The Wall Street Journal has referred to as “one of the most brutal years ever.” But 2009 is off to a rocky start and the near term, at least, looks grim.
Evidence of the economic downturn is everywhere. From the auto sector to once-great telecommunications giant Nortel, we see cutbacks, layoffs and, in the worst cases, bankruptcies as companies struggle to stay alive in this economy. Even advertisers are singing a different tune as special “recession deals” become commonplace.
The fundamental HR issues for organizations haven’t changed. But in the short term, the focus has narrowed to simple survival. Where we used to talk about adding value, the discussion now revolves around improving efficiencies and doing more with less. Cost containment and risk management are the buzzwords on everyone’s lips.
Employer pension plans are experiencing funding pressures—a problem that has ripple effects throughout the pension investment industry. Our Report on Custody finds that total pension assets under custody are down across the board. And group benefits plans may come under increased scrutiny as companies look to cut costs.
For now, at least, companies seem to be avoiding knee-jerk reactions. For example, our article on dental plans finds that most aren’t cutting back on dental benefits, even though these benefits can be costly. But the reality is that organizations may face difficult decisions in the months ahead.
If you must choose between laying off workers, freezing wages or slashing benefits across the board, which is the best option? How do you balance long-term goals with short-term necessities? And how do you reconcile the need to retain valuable employees with the need to maintain an aggressive bottom line?
There are no easy answers. In 2009, organizations will be searching for ways to cut costs without sacrificing their workforce needs. They’ll be looking to HR advisors for creative solutions, and both employees and employers will have roles to play. In other words, brace yourselves—the hard times aren’t over yet.
Alyssa Hodder is editor of Benefits Canada.
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the February 2009 edition of BENEFITS CANADA magazine.