Survey Shows How Small Companies Are Responding to a Big Recession

SAN LEANDRO, Calif.--(BUSINESS WIRE)--As the U.S. recession deepens and monthly job losses reach historic highs, a recent survey of more than 400 white-collar small businesses is shining a light on how small employers are evolving their human capital management practices in a down economy, and how employer practices are directly influenced by whether the small business owner is considered an “economic optimist” or an “economic pessimist.”

“Small businesses need to be agile and continue to evolve their human capital management practices in order to better align with market conditions”

Conducted by TriNet, a leading provider of human resources outsourcing and consulting services to small businesses, the TriNet Recession Practices Survey polled businesses in the technology, financial and professional services fields. The survey found that nearly half of the respondents fall in the category of being “economic optimists” and saw market conditions as least as good as in 2008. Of the economic pessimists, 34 percent viewed the economy as worse and 18 percent viewed it as much worse than 2008.

When it comes to hiring and talent acquisition practices for white-collar small businesses, the survey found that hiring plans are still on the table, but are being scaled back overall, with more than half of respondents saying they will hire fewer employees in 2009. Just as consumer confidence influences the performance of the market, employer confidence influences their business’s response to it. Specifically, 28 percent of economic optimists are planning to hire more employees in 2009 than the previous year and only 4 percent of economic pessimists are planning to hire more in 2009.

“Small businesses need to be agile and continue to evolve their human capital management practices in order to better align with market conditions,” said Jack Midgley, vice president of products for TriNet. “Fast growing companies are realizing in hard economic times they need to be smart about their employer practices in order to remain competitive and survive this recession.”

When it comes to a reduction of force, about one-third of respondents made staff reductions between October 2008 and February 2009, and 1 in 4 plan a reduction in force by June 2009. In addition, severance payments varied depending on market perspective with economic pessimists offering more liberal severance policies (39 percent of the pessimists offered severance for all involuntary terminations versus only 22 percent of economic optimists). Overall, when it came to continuation of benefits following involuntary employee termination, most respondents offer “COBRA-only” and fewer than 10 percent offer outplacement services.

The survey also showed that white-collar small businesses are implementing a broad range of capital cost-control measures already. Salary, incentive compensation, and benefit funding changes were found to already be under consideration or in place in most of the respondents’ companies. Further, many white collar companies have avoided “employee out of pocket” practices, like reduced workweek, reduced or mandatory paid time off, across the board salary reductions, but are now seriously considering them.

The survey was fielded to executives of small businesses in the industries of technology, financial services and professional services.

The entire TriNet Recession Practices Survey is available on the HR Resources section of TriNet.com.

About TriNet Group, Inc.

Founded in 1988 in the San Francisco Bay Area, TriNet provides strategic, cost-effective payroll, benefits, and HR outsourcing services to companies throughout the United States and Canada. TriNet specializes in helping small and medium-sized businesses reach their corporate goals and become destinations for top talent, enabling them to compete successfully with larger, more established organizations. TriNet’s comprehensive offerings include HR administration, online employee benefits administration and support, employer risk management, payroll processing, tax compliance, workers compensation, group health and welfare products, and strategic human capital consulting services. For more information about TriNet, visit http://www.trinet.com.