More than 1,000 organizations globally responded to Mercer’s “Leading through unprecedented times” SnapShot Survey , which was conducted online during the first two weeks of November 2008. The survey findings paint a vivid picture of the challenges that organizations are facing as a result of the current economic turmoil.
 
The survey indicates that organizations are taking a range of actions related to their talent and rewards strategies and programs. However, most appear to be refraining from taking drastic actions at this point. For example:
 
Nearly three-quarters of respondents (73 percent) said they are somewhat or very likely to reduce their 2009 pay increase budgets, but far fewer (38 percent) said they are somewhat or very likely to freeze salaries across the organization at 2008 levels. And while 69 percent expect to curtail hiring to below replacement levels, a similar number (69 percent) expects to hire key talent as originally planned, and nearly two-thirds (65 percent) say they are not likely to reduce their workforces by significant levels.
 
Where health and welfare benefits are concerned, employers intend to take a number of steps to understand the impact of the economic turmoil on their plans and costs, perhaps changing financial assumptions, increasing employee contributions or increasing their emphasis on wellness programs. But 84 percent said they are not likely to eliminate benefit programs as a result of the economic turmoil. Likewise, few employers cited plans to reduce defined contribution plan contributions in 2009.
 
The respondents indicate that their employees are very concerned about the current economic turmoil and its implications. They said that employees are most concerned about the impact on their retirement plan investments, followed by the impact on the overall organization, on their employment stability/job security and on merit increases for the coming year (click here to see exhibit).

Mercer consultants who analyzed the survey findings believe that employers, thus far, have taken a measured “wait and see” approach. Employers are taking actions most often seen in the earlier stages of an economic downturn, such as managing compensation costs and workforce levels and working to keep employees engaged and productive. However, discussions with Mercer clients indicate that more dramatic actions are being considered by boards and senior management, should the downturn become deeper and/or prolonged.
 
Mercer believes that a couple of factors may be influencing the survey responses. First, the survey was conducted when third-quarter results were just being released and the full impact of the economic downturn was not yet known; further decisions are likely to be made in response to fourth-quarter results (for calendar year-end companies) and updated economic forecasts.
 
In addition, Mercer consultants believe that many employers learned critical lessons during the last economic downturn about the importance of talent in building and sustaining competitive advantage, and so are reluctant to take actions that could hamper their recovery once the economy improves.