Just last week I met with about twenty senior HR executives to discuss the state of the economy and how companies are responding to “the great recession.” In this post I have highlighted some of the key themes I gleaned from our discussion as well as examples of initiatives/actions companies are taking in lieu of layoffs. But first, here are some of the questions/issues that surfaced for me and that I continue to ponder:

1. Dull Knife, Sharp Knife. It seems that companies are continuing to use a fairly dull knife……how do we know when we need to stop tinkering and take out a sharp knife? Is there a danger in piece-mealing too much……take the water bottles away this week, the mini bar next and the club membership the week after that?

2. Retention of Talent. Will talent stay if they have confidence in leadership, are learning and feel challenged? Will they loose faith in management if they feel it is not taking decisive action to control costs and maintain a viable company?

3. Forecasting – an act of futility in this environment? Are we throwing up our hands in exasperation and simply ignoring our budgets?

4. Unique opportunity for collaboration. Is this an exceptional time for companies to involve their employees in collaborative efforts to streamline processes, adjust business models and recalibrate perks and benefits without backlashs?

5. What will happen when the economy comes back? Have you started re-prioritizing what will be re-instated. If anything? Is this a blip or a permanent shift?

So, how are companies responding to the continued downturn? Here are some of the themes and tidbits from our discussion:

All over the map. In terms of layoffs, it is truly cyclical and industry specific. While some have had to lay off employees in large numbers, some are just now getting to the point that they are needing to downsize or expect to do so in the near term. Some industries however profess to be unaffected. We shall see. Most HR execs reported that their companies seem to have stabilized, at least for now, and they expect to continue to respond to the downturn using all tools available simultaneously. A few are selectively hiring though most indicate they are operating under a “soft” hiring freeze. Those that are facing layoffs expect this round to hurt a lot more as they shift their focus from D and C players and go deeper to B players. Most companies do not expect a significant turnaround in the next 18 months.

Using all tools available. Most HR executives reported that they have utilized and will continue to focus on “alternatives to layoff.”

· While companies to date have been inclined to look at either pay or hours reductions, they are more likely now to look at both.

o Initiatives to reduce work hours and use up leave accruals are becoming increasingly common (as a way to reduce huge accrued liabilities)

o Leave buy-back programs are considered more frequently (perhaps step-level programs wt higher cash value for initial leave balances)

o Furloughs are used by some (often wt exceptions for essential jobs)

· Companies are looking at this time as a rare opportunity to eliminate perks (that have evolved over time) without backlash. Employees are grateful to have jobs. Specific examples mentioned:

o Free bottled water and pop

o Free towels in the locker room

o Club memberships for executives

o Travel unless essential (sales reps are expected to drive not fly)

o Mini bars

o Gadget allowances. The cost of data is outrageous and companies are putting limits on the use of blackberries and i-phones. Some are moving to using OCS for all global calling

o Friday pizza

· Modification of benefit packages is being looked at more seriously

o Suspending 401K company matches

o Shifting to employee healthcare premiums as a percentage of salary (instead of having everybody pay the same)

o Higher employee level contributions for using out-of-network providers

· Efficiency programs and re-engineering/restructuring initiatives.

o Cost savings suggestions on company intranets

o Grassroots approaches are received positively by employees

o Employees are stepping up on their own and are grateful to have jobs

Weigh in!!!!! I’d like to know what your thoughts are on some of the issues/questions I identified in this e-mail.