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Changes organizations are making to manage economic challenges
In these challenging times, cost control, risk management, and employee productivity take on increased importance. The Society for Human Resource Management (SHRM) recently conducted an online poll of 450 HR professionals to determine what changes organizations have made in light of the 2008 financial challenges to the economy.
Wages, hiringCompanies are looking closely at their workforce and identifying poor and underperforming employees and taking steps to eliminate or consolidate jobs. On the other hand, they are recognizing and reaching out to retain key employees. Many are tightening operations and accountability with zero tolerance for wasting time on distractions such as text messaging, surfing the net, etc.
The SHRM survey found:
• 55% are somewhat likely or very likely to have hiring freezes
• 50% expect to cut employee bonuses
• 45% are somewhat or very likely to freeze employee wage increases
• 39% anticipate layoffs
• 18% expect to restructure executive compensation and/or severance packages.
Whatever the action, it’s important to remember that job changes can impact your Workers’ Compensation. Reduced workforces and cross training mean that some employees are doing different job-related tasks and may need to be re-classified. In some situations, employers may look to former employees or retirees to fill specific needs as individual contractors. This can be a thorny situation should the individual be injured. Setting up an arrangement with an employment agency to hire the individual and contracting with the agency can reduce your liability.
Furthermore, while employers expect weakening wages and salaries to cause declines in Workers’ Compensation premiums, it may not happen. One of the primary determinants of the premium, the Experience Mod, is calculated by comparing actual losses to expected losses, typically for a three-year period that excludes the most recent policy period. In situations where payroll and losses are decreasing, it is often the case that expected losses will decrease faster than actual losses and the Mod will go up, causing the premium to increase.
Finally, litigation often increases in step with unemployment. Make sure you have the proper documentation to support terminations or RIF decisions.
Financial education support for employees
According to the SHRM survey, 83% of the organizations are considering providing employees with financial educational literature and/or workshops by investment specialists. A 2005 report, Financial Distress Among American Workers, found workers with money woes have worse health, spend more time at work on the issue and also are absent more frequently. There are a number of websites that offer valuable resources on financial literacy including: Personal Finance Employee Education Foundation (PFEEF) and National Endowment for Financial Education.