Opportunity Management

As the impact of the global economic crisis takes hold, a quarter of large U.S. employers expect to make layoffs in the next 12 months. However, most companies are focusing on increased employee communication and smaller cost-saving measures, according to a survey by Watson Wyatt, a global consulting firm.

The steps being taken by large corporations surveyed by Watson Wyatt dovetail with what Main Street independent insurance agency owners say they are doing to cope with the financial crisis. Agents are less inclined to halt their hiring but they are busy cutting unnecessary spending, according to an online survey by Insurance Journal.

All businesses, big and small, appear to be taking measured rather than extreme approaches to the crisis.

“Employers are still sorting out the impact of the economic crisis, but changes are clearly in the wind,” said Paul Platten, global practice director of Watson Wyatt’s human capital group. “As they respond to the new environment, companies will have to balance how to control costs, maintain employee morale and prepare for future staffing challenges.”

According to the Watson Wyatt survey, roughly one of four is planning layoffs (26 percent), hiring freezes (25 percent) or raising employee contributions to health care plans (25 percent). While some surveyed also plan other changes, including travel restrictions, restructuring and reductions in training, relatively few in that survey expected to freeze salaries, reduce 401(k) matches or freeze or close pension plans.

According to the Watson Wyatt survey, almost three out of 10 large employers (28 percent) have reduced their merit pay budgets in the wake of recent financial developments. Of those employers that reduced their budgets, the projected raise is now 2.5 percent for 2009, down from 3.7 percent.

But true to their entrepreneurial spirit, independent agents are not just looking to cut, scrimp and save. They are equally focused on new opportunities. Another 22 percent said they are exploring new sources of revenue to help weather the crisis.

Indeed, the best of the best agencies in the United States are continuing to invest in new production talent, according to recent report on “Best Practices” agencies by the Independent Insurance Agents and Brokers of America (the Big “I”). The Big “I” Best Practices Study found that despite the challenges of the soft market, the largest agencies hired an average of 9.4 new producers during the last fiscal year and the smallest agencies averaged 1.5 new producers. (See the full story on page 14.)

If any business owners can find opportunity in the financial mess, independent agents can. It won’t be easy, but they’re not afraid of the challenge.

Topics Agencies