Post Crash / Pre Recovery

As we approach the dog days of summer the landscape continues to shift underneath and we ask the question what next? When do things return to normal? Our answer a la Gertrude Stein's reference to Oakland is that "...when you get there, there isn't any there there". Returning to normal is no longer possible as few organizations will truly be the same going forward. This includes my own company Watson Wyatt and my prior company Towers Perrin who have recently announced a proposed merger. Today's topic is about the broader external landscape and I will be addressing the process of change from inside a merger in a separate set of posts.

Watson Wyatt's June release of its bimonthly report on the Effect of the Economic Crisis on HR Programs clearly captures the absence of a consistent expectation of a return to normal. Despite showing trends that indicate a bottoming out of the economic cycle and the expectation among many employers of a restoration of salary levels; a number of employers are indicating no expectation of a return. Out of a sample of 179 large U.S. employers:
* 45% don't intend to reverse salary reductions in the next 12 months
* Of those restoring salaries 22% aren't restoring back to the former levels
* More than a third are unsure when they will reinstate 401k matches
* Many are unsure when they will reverse furloughs or hour reductions
* 31% do not know when travel restrictions will be lifted
* Long-term changes are expected to impact staff size, employee age and health care

How we address this new reality will be the key to organization success in the future. A post on the new reality and the topics that Boards and Executives must address now will follow shortly.