In the latest indication that companies remain jumpy over the economy, almost half of respondents to a Challenger, Gray, & Christmas survey said they’re expecting a recession, and nearly a quarter are actively planning for one.
Among the 207 human resources and business leaders the outplacement firm polled this fall, 46% are eyeing a recession and 24% are engaged in earnest preparations.
Still, fewer companies are undergoing or planning layoffs than were in Challenger’s spring 2023 survey, when 45% of participants were doing so. In the current survey, that number receded to 29%.
“A lot of the cost-cutting companies planned was carried out before the fourth quarter,” said Andrew Challenger, the firm’s senior vice president. He noted that there had been a 198% increase in layoff announcements in this year’s first three quarters compared with the same period in 2022.
In what may in retrospect be the first visible tip of a very large iceberg, so far this year companies have attributed 3,997 job cuts to artificial intelligence, according to Challenger. The cuts tend to happen either because a company is pivoting to developing AI technology or using it to replace positions.
Only about one in seven companies (13%) are making significant cost cuts in areas other than the workforce. Among them, reducing business travel and renegotiating vendor contracts are the most popular tactics.
The reduction in business travel could be partly a result of the lasting impact of remote and hybrid work arrangements, according to Challenger. More than half (54%) of companies now report having a remote or hybrid schedule and have no plans to return all employees to the office full-time. In the spring survey, only 42% of companies made such an acknowledgment.
“It certainly appears that companies do not expect workers to be in an office five days a week and are more willing to stream workers into meetings than fly them,” he said. Indeed, only 10% of respondents said employees are typically in the office all five days, while 57% said two or three days on-site per week is the norm.
Most companies still have difficulty hiring employees, although a plurality said the task is getting easier.
How are companies trying to entice current employees to stay and new ones to join?
More than two-thirds (69%) are offering hybrid work arrangements. Other typical offerings include leadership development (55%), flexible work hours (52%), tuition reimbursement (49%), mental health care options (48%), higher pay (44%), diversity/equity/inclusion (DEI) initiatives (41%), fully remote work options (37%), signing bonuses (34%), mentorship programs (24%), and retention/stay bonuses (20%).
The prevalence of pay increases, at 44%, was down sharply from 55% in the spring survey. The proportion of companies offering DEI initiatives has declined steadily since the spring of 2022.