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Creative ways to avoid layoffs

  • Story Highlights
  • Most employers expect staff levels to remain the same
  • Companies are using pay cuts and reduced benefits to avoid layoffs
  • Hiring freezes and postponed start dates are ways employers are saving money
By Matt Ferguson
CEO of CareerBuilder.com
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CareerBuilder

Editor's note: CNN.com has a business partnership with CareerBuilder.com, which serves as the exclusive provider of job listings and services to CNN.com.

Job candidates wait in line at a job fair in McLean, Virginia. Employers are using hiring freezes to cut costs.

Job candidates wait in line at a job fair in McLean, Virginia. Employers are using hiring freezes to cut costs.

Entering the third quarter, employers everywhere are still feeling the effects of the current economic climate.

Companies are finding ways to deal with the downturn, however, and a few are even increasing head count.

A new survey from CareerBuilder and USA Today, conducted by Harris Interactive, examines how employers are handling the recession and their expectations for staff levels and compensation in the upcoming quarter.

Although the most recent numbers from the Bureau of Labor Statistics show job losses are moderating, the job market is not likely to experience significant job creation through the rest of 2009.

Most employers expect their staff levels to remain the same this quarter, according to the survey. Businesses will continue to be conservative in their hiring and maintain focus on existing human capital.

Quarterly hiring

In the second quarter of this year, 64 percent of employers reported no change in head count and 18 percent said they increased staff levels, which is a 13 percent increase from the first quarter. Seventeen percent of businesses reduced their number of full-time workers, marking progress from 26 percent who made cuts in the first quarter.

In terms of hiring this quarter, 68 percent of employers said they don't expect to increase the number of full-time, permanent employees in the third quarter. Fifteen percent, however, say that they will be increasing staff levels and 10 percent anticipate making some cuts.

Hiring by region

Eighteen percent of employers in the Northeast and the South both plan to increase full-time, permanent head count in the third quarter.

In the West, 13 percent of hiring managers have plans to recruit, little change from the second quarter.

The ongoing challenges within the manufacturing sector, however, caused the Midwest to drop from 14 percent to 11 percent of employers who are hiring. Eleven percent of hiring managers in the Northeast, West and Midwest expect to trim staffs compared to 6 percent in the South.

Compensation in Q3 2009

Employers continue to be conservative with pay increases this quarter, as only 41 percent of employers expect to increase salaries for full-time, permanent employees -- unchanged from the second quarter.

But, 47 percent of employers anticipate no change in compensation levels and only 7 percent expect a decrease.

Of employers who are increasing pay, 28 percent estimate the amount will be between 1 and 3 percent; 12 percent expect an average raise of 4 to 10 percent, while only 1 percent expects raises to be 11 percent or more.

How employers are managing the economic downturn

The challenging economy is causing employers to rethink ways in which they can save money and retain employees. Here are six ways employers are attempting to do so:

1. Postponed start dates

In an effort to secure talent while delaying expenses associated with hiring new staff, 8 percent of employers have presented job offers with postponed start dates this year. Of these employers, 42 percent provided a pay incentive, while the remainder did not.

2. Furloughs

Furloughs, or temporary leaves of absences from employment, have been seen more and more in the past year. Ten percent of employers have instituted mandatory furloughs for employees over the last six months. The majority of furloughs were one week or less, while 28 percent were one to two days.

3. Pay cuts

An unfortunate, but often necessary, way to contain costs is by implementing pay cuts, which 16 percent of employers have employed in the last six months. Of those who instituted cuts, 28 percent said all salaries were reduced by 5 percent or less, while 33 percent had decreases of more than 5 percent. Thirty-nine percent reported that cuts varied according to salary and/or title.

4. Hiring freezes

Although job losses are trending downward, some employers are still unable to create new positions within their organization: 69 percent of employers reported a continued suspension of hiring this quarter.

Forty-four percent of employers have instituted a hiring freeze over the last six months, but of these employers, 31 percent stated that they will be hiring going forward.

5. Revised sick policies

Thirteen percent of employers are changing their sick time or paid time off policies in order to cut costs this year, offering fewer days, not allowing days to roll over or limiting the amount of days that can roll over.

6. Fewer perks and benefits

This year has caused 43 percent of employers to cut employee perks and benefits, mainly in bonuses, 401(k) matching and medical coverage. Other areas impacted are free condiments, employee incentive trips and academic reimbursement.

Copyright CareerBuilder.com 2009. All rights reserved. The information contained in this article may not be published, broadcast or otherwise distributed without the prior written authority

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