CFODailyNews.com » Reversing salary cuts: Sign of the recovery?

Reversing salary cuts: Sign of the recovery?

August 21, 2009 by Jared Bilski
Posted in: Benchmarking, Cost cutters, Economy, In this week's e-newsletter, Latest news & views, Management issues

A good sign for an economic recovery in near future: More firms are planning to halt or reverse the cost-cutting strategies they used to survive the recession.

A recent Watson Wyatt survey found that an increasing number of companies are planning to end salary cuts and freezes, and reinstating the company’s 401(k) match.

The changes are geared toward ensuring top-performing employees don’t jump ship once the economy rebounds — a fear many employers have, according to the study.

The chart below illustrates how many companies are planning on reversing salary cuts and freezes, and restoring the 401(k) match now — as opposed to two months ago.

CFOdaily_chart60

There is one area, however, where most companies plan on staying firm: sharing the healthcare burden with employees.

The study found that 66% of employers that boosted employees’ share of healthcare premiums don’t plan on reversing their decision, and 40% of employers plan on cost shifting through future premium increases.

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