Dive Brief:
- North American employers are implementing cost control methods as they prepare for the financial effects of the COVID-19 pandemic, as more than 4 in 10 companies implemented a hiring freeze or have reduced hiring. Another 28% will or might do the same. Relatively few have cut salaries, according to a report released March 30 by Willis Towers Watson, a global advisory, broking and solutions company. The report also said that wage freezes or delayed raises are also on the table, though not as common as hiring freezes.
- A total of 812 companies, employing nearly 9.3 million workers, participated in the survey, which found that 1 in 5 companies have reduced or eliminated hiring seasonal workers, and 35% plan to do the same. About 12% of employers have reduced or delayed salary increases of workers or have capped salaries (8%), but nearly a quarter are planning or considering implementing the initiatives.
- Only 7% of companies surveyed have laid off employees, most commonly hourly wage earners, but 37% said they will or may do so in the future. Less than 10% are offering voluntary unpaid leaves of absence, or reduced workweeks; however, more than a quarter of respondents may do so in the future, according to the report.
Dive Insight:
The COVID-19 pandemic has taken a financial toll on industries, but many companies are committed to ensuring the livelihood of workers.
"Companies’ highest priorities remain the physical and financial wellbeing of their employees," Adrienne Altman, managing director, North America head, Rewards, Willis Towers Watson, said in a statement.
In the U.S., several banks have announced a commitment to forgo layoffs. Morgan Stanley CEO James Gorman wrote in a memo March 26 that in 2020 the bank would not cut jobs, HR Dive’s sister publication Banking Dive reported. Gorman’s peers, including Bank of America CEO Brian Moynihan, soon made the same commitment. Citigroup and Wells Fargo said they would hold off on any staff cuts, but the move may be temporary.
Some companies are actually hiring during this time of uncertainty. Walmart and Amazon plan on hiring at least 100,000 workers, and CVS Health plans to fill 50,000 positions. Willis Towers Watson’s survey found that some employers are even providing subsidies to manage the cost of working remotely including Wi-Fi, childcare, office equipment borrowing and heat and electricity.
But Altman said companies will use cost control strategies as well. "Amid heightened concern over the impact the virus will have on their operations, companies have started to implement some of the same cost control measures we saw during the last recession."
For example, Macy’s announced March 30 that despite implementing a hiring and spending freeze and reduced pay for management, it needs to further cut costs and will furlough workers. "Across Macy’s, Bloomingdales and Bluemercury brands, we will be moving to the absolute minimum workforce needed to maintain basic operations," the retailer said in a statement. "This means the majority of our colleagues will go on furlough beginning this week."
The same day, Kohl’s announced it will furlough workers as well. "Given that the company will be extending the duration of our store closures until further notice, Kohl’s will temporarily furlough store and store distribution center associates, as well as some corporate office associates whose work has been significantly reduced by the store closures." The CEOs of both Macy’s and Kohl’s will not take a salary during this time.
Altman said that although layoffs and workforce reductions may become unavoidable for some companies, it appears that it’s a means of last resort. To provide economic relief, the Coronavirus Aid, Relief, and Economic Security Act (CARES) was signed into law March 27. The legislation provides small businesses and nonprofits with 500 or fewer employees almost $350 billion in partially forgivable loans. And CARES will supply $500 billion in support to distressed businesses.
