Economic downturn starts to bite hard

The effects of the current
economic downturn have started to bite hard, causing anxious employers to cut
back on recruitment expenditure, payroll costs, business travel and expense
allowances, a new survey says.

HR consultancy Cubiks’ survey
of 100 HR professionals, Managing people through an economic downturn, shows:

The majority of employers
are feeling the pressure
– 71 per cent of survey respondents reported that
their company’s profits or revenue had been hit by the downturn and more than
half had announced redundancies within the last year. In all, 45 per cent
expected their organisation to begin a major restructuring exercise within the
next two years.

Recruitment is being used
as a key lever to control costs
– 65 per cent of organisations said they
will be spending less on recruitment in 2002 than in previous years. However,
39 per cent intend to begin an active campaign when the situation improves.

It is not a time for high
pay rises
– 66 per cent said that the average pay rise awarded in 2002 will
be lower than those awarded in 2001, though 75 per cent of companies do have
the freedom to offer higher salaries to exceptional staff in order to ensure
they stay with company – suggesting the most talented people can still get the
rewards they demand.

60 per cent think senior
managers should set an example
to the rest of their employees by accepting
a pay-freeze or a pay-cut until conditions improve.

Workplace stress is
becoming a serious issue
– the effects of cost-cutting policies are
combining to produce a highly-stressful working environment. In all, 52 per
cent said uncertainty is leading staff to work extended hours to avoid
redundancy, and two-thirds believe individuals who survive a redundancy
programme feel more stress as a result. Two-thirds thought their organisation
does not pay enough attention to work-related stress.

Commenting on the report, Barry
Spence, CEO of Cubiks, said: "Clearly we are operating in a very
challenging environment where pressure is running high for all employees, and
not just the most senior figures. Rather than feeling relieved to be in work,
many individuals will be struggling to cope with an increased workload and may
not have the competencies needed to tackle new responsibilities. What’s more,
they will understand there is little prospect of new staff arriving to ease the
pressure. In addition, they probably did not receive the pay rise they were
hoping for and feel entitled to.

"In such circumstances, it
is vital that employers demonstrate to their staff that they are valued and an
integral part of the company’s future. Investment in personal development is an
ideal way to do this and one of the few options open to many HR professionals
when budgets are tight.

"Equally, it is vital that
companies act responsibly and monitor stress levels across their organisation.
By taking such steps, they can head-off problems in advance, increase
performance, reduce absenteeism, avoid damaging litigation, and improve their
employer brand. This isn’t difficult to do and can deliver significant
long-term benefits."

Although some 77 per cent of
respondents stated that they believe the development of existing staff is the
best and most cost-effective way to acquire individuals with the appropriate
skills set, only 18 per cent of organisations currently re-direct any portion
of salary savings from redundancies into the development of existing staff.

By Quentin Reade

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