US firms use redundancy as a last resort in cost cutting

Companies
in the US are looking at all other cost cutting alternatives before making
redundancies to cope with the economic downturn.

A
survey by the Society of Human Resource Management shows that 63 per cent of
employers use staff attrition (not replacing staff who leave) to cut costs and
49 per cent opt for an employment freeze.

A
fifth of the 570 HR professionals surveyed said they don’t renew contracts and
a similar proportion encourage staff to take vacations.

More
than half of respondents cite declining profits as the main factor that
eventually led to the decision to lay off employees and 45 per cent blame
restructuring for having to make redundancies.

Nearly
40 per cent of HR professionals in the survey, which was completed on 7
September, say the state of the economy led to the decision to axe staff.

SHRM
president Helen Drinan said, "Layoffs are disruptive and difficult for
everyone, and most organisations are taking steps to avoid them if possible.

"The
majority of those who can’t avoid layoffs are offering severance packages that
include a variety of benefits."

The
research shows that redundancies have a serious effect on staff morale, with 58
per cent saying that it fell after layoffs were announced and 54 per cent of
respondents reporting increased gossip.

To
combat this, more than half of respondents indicate they tried to improve
communication and 28 per cent held morale boosting events.

Drinan
commented, "It appears that most organisations are missing an important
opportunity. They could and should do more to boost morale for employees
remaining with the organisation to stem further turnover and to increase
productivity."

The
survey reveals that following redundancies, 32 per cent of organisations
benefited from increased profits and a quarter from improved productivity.

By Ben Willmott

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