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Employers Cut Back on Benefits and Perks This Year

MSN.careerbuilder.com, March 27, 2009
By Rosemary Haefner, vice president of human resources for CareerBuilder.com

Ever since the big banks started tumbling last year, the economy started on a downward trend that looks to continue for the foreseeable future. Although many experts had wondered aloud if we were in a recession for the last year, the dour employment numbers and foreclosures answered their curiosity. As a result, we've seen a chain reaction of budget tightening work its way from the biggest corporations to the smallest households. Over the last few months, news headlines have been filled with layoffs and downsizing. Many employers reduced their work force in order to meet market demand, but many of them realize you can only make so many personnel cuts before you damage your own business. Still, they need to cover their costs one way, and an alternative to layoffs is to reduce benefits offered to employees.

Expect a reduction in perks

Employers have always watched their expenses closely, but they've grown even more attentive to spending these days. As they wait for improved economic conditions, 38 percent of employers will make administrative cuts in 2009, according to a February 2009 CareerBuilder survey. The survey asked employers what -- if any -- administrative cuts they intend to make in 2009. Administrative cuts involve only operating expenses and are not reductions in personnel.

In many companies, social events and business trips will be scaled back or eliminated this year. Of the employers who expect to make administrative cuts in 2009, 65 percent foresee holiday parties, picnics and other social occasions being scaled back or discontinued.

Employees might also see a change in how they meet with clients this year. Business travel is also likely to be reduced, say 61 percent of employers. This could mean you'll see an increase in conference calls and virtual meetings rather than day trips to another location.

Also feeling the pinch of budget tightening are health and wellness benefits. Twenty-five percent of employers intend to cut back health-care benefits and 11 percent will scale back wellness benefits, such as gym reimbursements. Even the smaller perks that employee have grown accustomed to -- such as coffee, ice machines and discounted vending in the break room -- might be disappearing, say 21 percent of employers.

Employers perform a balancing act

Employers are aware that they walk a tight line between helping finances and damaging talent retention. They know that each reduced or eliminated perk changes how employees view their jobs, and employers don't want to lose their best workers. Yet, in order to pay their staff, they need to cut costs somewhere. In response, employees are seeing a wealth of other, less traditional perks offered to compensate for the ones that are taken away.

Thirty-nine percent of employers have begun to offer more options for telecommuting and flexible work schedules. In addition to convenience, employees also save commuting costs as a result. Some employers even offer incentives for public transportation, mileage reimbursements and compressed workweeks. Although the economic situation forcing these perks isn't the most favorable, employees have shown an increased interest in working from home and having a flexible schedule over recent years.

Perhaps the silver lining for employees is that some of these workplace wishes are coming true.

Rosemary Haefner is the vice president of human resources for CareerBuilder.com.