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HR Professionals Believe the Layoffs Arent Over

Some economic indicators imply that unemployment has bottomed out. But that’s not how it looks to some in HR.

June 25, 2009
Related Topics: Career Development, The HR Profession, Employee Career Development
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Despite indications that unemployment has bottomed out, more than half of HR professionals say their organizations will conduct more layoffs by the end of the year, according to Workforce Management’s HR Anxiety Survey.

According to the survey, which was conducted from May 27 through June 3, 40 percent of the 356 HR professionals answering the question said they think their companies might have another round of layoffs by year-end. Twenty-six percent said they were certain that there would be more layoffs.

These responses seem to contradict recent data that indicate that unemployment has bottomed out. The Conference Board’s Employment Trends Index for May showed a 0.2 percent uptick from April. The moderation indicates that “the decline in job losses is real and signals that the worst is over,” says Gad Levanon, senior economist at the Conference Board. The index is based on a number of factors, including the number of job openings; initial claims of unemployment insurance; and the percentage of respondents who say they are having difficulty finding jobs.

The fact that such data seem to conflict with HR managers’ perceptions might not necessarily be a contradiction, Levanon says.

“We will still see job losses in the second half of 2009, but they are going to be more moderate than what we have seen in the first half of the year,” he says. “There were 349,000 job losses as of May 2009, compared to an average of over 600,000 for the six months before that.”

Recent data released by Mercer supports the notion that while layoffs may still be in the offing for the remainder of the year, the number of jobs being slashed is decreasing. While 58 percent of employers surveyed by Mercer say they plan cuts to their workforce this year, only 5 percent plan deep cuts (more than 10 percent of their workforces).

“I think at most organizations there is a recognition that we aren’t at the bottom yet, but we are near the bottom,” says Steve Gross, global leader of broad-based performance rewards consulting at Mercer. “A lot of my clients who were hunkering down three to four months ago are now starting to talk about plans for 2010.”

Also, many companies are laying off low- or poor-performing employees in an effort to take advantage of the number of talented people out of work right now, says Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School.“This is an opportunity to up-skill their labor,” he says.

Gross agrees that this is likely to be the case, particularly at smaller companies that can’t afford to have poor performers.

“Every company has 5 percent that they wish weren’t there,” Gross says. “I think most of those people are gone now.”

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