Despite the current economic downturn, most American companies do not have a set strategy to deal with a worsening economy. One-third of U.S. companies say they do not have a workforce contingency plan, according to Watson Wyatt Worldwide.
More than half of American companies say that contingency plans in place are focused around layoffs, while an additional 46 percent say their plan is “to restructure their organizations.” Few companies are thinking of creative methods to protect key talent, said Layra Sejen to FinancialWeek. Only eight percent of companies say they are planning to offer a reduced workweek.
“Maybe some companies are thinking they can’t anticipate what’s going to happen, so they will just address issues as they arise,” Sejen told FW. “But it’s hard for me to believe that any business could think that they would not be subject to the volatility of the market.”
Companies are not focusing on planning ahead which could result in paying higher premiums for talent in the future. Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School of Business told FW, “If they are not planning during bad times, I doubt that they are planning in general about what their workforce needs are going to be in the future.”
He warns that because so many employers in China and India are new, they aren’t stuck in the old ways of doing things that American employers can’t seem to relinquish. European companies deal with unions so they are more proactive about workforce planning. Most often contingency plans are part of the agreements companies have with unions.
Rich says American employers are still short-sighted and need to address the need for contingency plans.