Hewitt Survey Indicates Most Canadian Organizations Have No Plans to Lay Off Employees Despite Turbulent Financial Times

    Employers Are Focusing on Smart Use of Human Resources Budget

    TORONTO, Jan. 22 /CNW/ - Even though Canada and much of the rest of the
world is in the midst of a recession, the majority of Canadian employers are
proceeding with caution, avoiding layoffs where possible, according to a
recent survey conducted by Hewitt Associates, a global human resources
consulting and outsourcing company. Instead, organizations are looking at
alternative solutions to manage human resources budgetary constraints, while
still investing in those programs that drive employee engagement.
    Survey results indicate that, for the most part, employers are
considering changes with an eye to the future. Few are cutting back on
employee benefit programs: any reductions are focused on discretionary
spending, such as business travel. "Employers recognize that the recession
won't last forever and they don't want to find themselves short of employees
or skills when things improve," stated Tim Clarke, Hewitt Canada's benefits
practice leader.

    Limited Layoffs but Fewer New Hires

    Fifty-three per cent of survey respondents are scaling back recruitment
efforts and 47 per cent have put a stop to plans for new hires. In comparison,
thirty-one percent of the 192 companies surveyed indicate some layoffs are
expected. Most of these layoffs will occur in the manufacturing sector, or at
retail, financial and pharmaceutical companies.
    Early retirement programs are not figuring heavily in companies' plans at
this time. Only 15 per cent of those surveyed indicate that they currently
offer, or expect to offer, early retirement incentives; 80 per cent do not
expect to utilize early retirement programs to manage workforce numbers.

    Benefit Programs Tighten but Remain Intact

    Few organizations are planning to make cuts to employee benefits. Eighty
per cent intend to leave their medical, dental and disability benefit plans
unreduced. Some employers are even planning to expand their benefit programs.
Benefits that improve employees' overall well-being and help them manage
stress seem to be particularly popular, including health and wellness programs
and coverage for paramedical services such as physiotherapy or massage
    "In lean operations where every employee counts, companies need staff to
contribute by staying healthy and engaged," said Rochelle Morandini, a senior
organizational health consultant with Hewitt. "Employers understand that they
need to support their employees in managing their stress and staying well, so
that they can maintain productivity."
    Certain other benefits will also remain intact or even be enhanced. "As
far as benefits like employee recognition and loyalty programs, and training
and development, it seems that the majority of employers view these programs
as good ways to maintain engagement - employees' desire to stay with an
organization and put in their best effort on the company's behalf," said
Clarke. "Moreover, most of these programs do not cost a lot, as compared to
other benefits, so it's money well spent from both the employees' and
employer's perspective."
    Most retirees and near-retirees are no more likely to be affected by
tighter human resources budgets than others, according to the survey data.
Only five per cent of respondents plan to cut retiree benefits, and even fewer
plan to cut retirement contributions or member services. This is good news for
older workers and current retirees whose retirement savings have been hard hit
by the meltdown of the markets.
    Many employers are looking to reduce their benefits costs where possible,
primarily in ways that will have no direct impact on employees and their
families. About 25 per cent will be seeking a reduction in benefit insurers'
administration fees, commissions and outside supplier fees. Only about 11 per
cent plan to cut internal pension and benefits support staff.
    The biggest cuts will occur in business travel: 58 per cent of
respondents plan to cut back either substantially or slightly. Holiday
celebrations also seem to be on the wane, with ten per cent of organizations
cutting back significantly this past season and a further 22 per cent cutting
back slightly.

    Communication is Key

    Despite widespread reports of the economic downturn, few organizations
are dealing directly with the stress that may be caused by fears of cutbacks
and layoffs. Over 35 per cent of employers are not planning any communication
to employees about the situation or its impact on their workforce. Of those
who do plan to communicate with employees about the economy, most
organizations will discuss the business climate in general, rather than
specifics about human resources strategies, pensions, benefits or
    "Employer silence at this time may unnecessarily raise employee anxiety,"
stated Morandini. "This is a perfect opportunity for organizations to reach
out to employees to explain their approach, the actions they are taking to
cope with the recession and their rationale. Clear communication will not only
allay fears, it will help employees feel somewhat more in control, and even
have further benefits such as getting employees on side and participating with
cost-saving measures."

    About Hewitt Associates. For more than 65 years, Hewitt Associates (NYSE:  
HEW) has provided clients with best-in-class human resources consulting and
outsourcing services. Hewitt consults with more than 3,000 large and mid-size
companies around the globe to develop and implement HR business strategies
covering retirement, financial and health management; compensation and total
rewards; and performance, talent and change management. As a market leader in
benefits administration, Hewitt delivers health care and retirement programs
to millions of participants and retirees, on behalf of more than 300
organizations worldwide. In addition, more than 30 clients rely on Hewitt to
provide a broader range of human resources business process outsourcing
services to nearly a million client employees. Located in 33 countries,
including Canadian offices in Toronto, Montreal, Vancouver, Calgary and
Regina, Hewitt employs approximately 23,000 associates. For more information,
please visit www.hewitt.com.

For further information:

For further information: Marcia McDougall, Hewitt Associates, (416)
227-5713, marcia.mcdougall@hewitt.com

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