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December 10, 2001 Issue

Looking Back, Looking Ahead: 2001 Wrap Up and 2002 Projections

As we enter the holiday season and prepare for 2002, it is time to take a look back at an extraordinary year and provide some insights for the year ahead.

Last December, we made the following predictions for 2001:

Continuation of the move to implementing "New Pay" strategies.
Compensation programs emphasizing strategically designed department based, self-funded goal-sharing programs.
Programs that allow employees to exchange cash awards for time off or products.
Increased management / employee human resource design committees.
Continued battles in Congress over FLSA amendments.
Increased balance between "high tech" and "high touch" in working with employees.
Increased organization strategies that recognize the importance of fun in the workplace.
Continued growth in using a single job description / performance appraisal document as currently seen in healthcare.
Continued growth in using market-based job families and pay structures.
Increased concern for workforce diversity issues and the need for human resources to effectively respond.

During the first quarter of 2001, we felt the immediate impact of a divided country as a result of the contested presidential election. When the Senate moved to Democratic control, the legislated agenda shifted from moving forward with a grand scheme to compromise and long debate. The legislated emphasis was on the dramatic change in the economy. Tax relief and economic stimulus programs became the priority.

During the first eight months of 2001, everything seemed to move in slow motion. Most human resource professionals confided they held off moving forward on initiatives until there was a better sense of where the market and the political climate were heading. We started hearing about layoffs and the end of the dot.com boom.

Astronology addressed the following topics in 2001:

Putting the HR Department on an Incentive Program
Measuring Employee Attitudes at a Reasonable Cost
Don't Leave Out Your Leadership Staff - Using Competency Based Assessment and Reward Systems
50 to 150 Ways to Keep Great Employees
What Retention Strategies are Used Around the World?
Do Employer Bargaining Objectives Have an Impact on Non-Bargaining Group Employees?
How Can I Communicate our Benefit Plans to Employees of All Ages?
Who Moved My Pay?
You Can Avoid Hiring Disasters
2001 WorldatWork Conference Review
Ethically, Legally, and Responsibly Reward Executives for Extraordinary Contributions - Issues and Solutions
59 Second Employee Response to the One Minute Manager
2001 SHRM National Conference Highlights
Impact of Living Wage Ordinances on Your Compensation Program
2002 Compensation Program Planning
How Do Paid Time Off Programs Fit Into My Total Compensation Strategy?

Then came September 11.

In the words of singer / songwriter Alan Jackson "Where were when the world stopped turning on that September day? Did you call your mom just to say I love you or look at a sunset you never noticed before?" Astronology published a 9/11 perspective. Even though it has now been three months since the world stopped turning, those of us in New York City still cannot believe the emptiness of the skyline. Every Sunday, the New York Daily News lists the memorial services that continue to be held and provides details of someone else's life and the people that unknown someone touched. It makes the movie It's a Wonderful Life even more meaningful.

The world then started to move again, but with a different perspective. Astron Solutions and Astronology continued as well, addressing the following topics:

How Can I Create Employee Ownership Without Using Stock Options (Parts I and II)
SHRM/BNA HR Activities, Budget, and Staff 2000 - 2001 Survey
Best Practices of Sabbatical Leaves
What Incentive Pay Plans Work Best to Enhance Customer Service

We end 2001 as we started - with many questions and insecurities about the future. We are a nation still focused on bringing to justice the cowards that took innocent lives and disrupted so many others. There are signs of hope. Stock markets are back to their pre-9/11 levels. We hear many client organizations speak optimistically about 2002 planning and the need to continue with effective HR strategies to attract and retain the talent required. We are focusing on how best to deal with our employees and reinforce their importance in the organization.

What does this mean for 2002 planning? The most important issue to address is changes to the initial 2002 compensation planning predictions. The following is a summary of findings from a variety of consulting firms following September 11th:

Hewitt Associates reports that 660 organizations contacted plan to reduce their initial budgets by an undisclosed amount.
The Conference Board reports that large companies are not scaling back their budgets for merit increases.
Mercer Consulting reports that 19% of 340 employers have cut next year's increase budget from 4.5% to 3%. Another 11% have indefinitely postponed raises. 2% have scraped them all together.
Watson Wyatt reports that 30% of employers surveyed have reduced merit budgets from an average of 5% to 3.3%.

It is clear that we will move into 2002 with many of the same issues and strategies that were discussed in 2001. Much will depend on the outcome of our military action and the impact of the changing, non-cooperative political environment. We are all taking this time to look in the mirror and decide what is really important for our organization, our employees, our country, and ourselves.

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ISSN Number 1549-0467