According to the 2009 ASSEMBLY State of the Profession survey, budget cutbacks, time constraints and global competition will continue to create big challenges for manufacturers during the next five months. But, things should be less stressful than they were during the first half of 2009. A recent study conducted by Mercer LLC also indicates that deep workforce, pay and benefit cuts will moderate during the next five months.

State of the Profession survey, budget cutbacks, time constraints and global competition will continue to create big challenges for manufacturers during the next five months. But, things should be less stressful than they were during the first half of 2009.

A recent study conducted by Mercer LLC, a human resource consulting firm, also indicates that deep workforce, pay and benefit cuts will moderate during the next five months.

Some 58 percent of organizations worldwide plan some cuts to their workforce in the remainder of 2009, compared to 66 percent that had implemented workforce cuts in the six months prior to the Mercer survey. However, only 5 percent of these organizations plan deep cuts (more than 10 percent of staff) in the remainder of the year, compared to 13 percent that made such cuts in the six months preceding the survey.

The percentage of companies planning layoffs in the next six months varies by region. For instance, American companies were more likely to have made at least some workforce cuts in the prior six months (74 percent), but fewer companies (64 percent) plan cuts by the end of the year.

Some 59 percent of Asian companies responding to the survey made cuts in the prior six months and are also less likely to make cuts in the next six months. In Europe, the number of companies planning substantial cuts is expected to drop from 16 percent to 10 percent.

Despite the impact of the weak economy, many companies plan to remain focused on their most valuable employees. More than one-third (37 percent) of organizations globally claim they will continue to hire key talent even as they reduce their workforce overall.

The Mercer study also reveals that organizations are beginning to use or consider alternative work arrangements to control workforce costs. Ten percent globally have already instituted voluntary reductions in hours with a corresponding reduction in pay, while 12 percent have instituted such a program on a mandatory basis. Roughly an equal number of organizations are considering similar actions during the remainder of 2009.

Organizations around the world are almost equally divided on whether their 2009 base pay budgets will be more than their 2008 budgets (31 percent), equal to 2008 budgets (33 percent) or less than 2008 budgets (36 percent).

Companies have been more likely to freeze pay levels or defer pay increases than to implement pay cuts. In the past six months, 51 percent of the respondents to the Mercer study froze salaries at 2008 pay levels for at least part of their employee population, while 32 percent froze pay enterprise-wide. Just 30 percent deferred 2009 pay increases and even fewer (13 percent) decreased salaries from 2008 levels. For the remainder of 2009, most organizations plan to freeze salaries at 2008 levels or make 2009 pay increases as planned.