One-Third of US Companies Had No Plan for Downturn

The Find: The credit crisis has been brewing for at least a year now, which makes the fact that only 68% of US businesses had contingency plans for an economic downturn in place this summer all the more surprising.
The Source: Consultancy Watson Wyatt's 2008 Global Strategic Reward survey.

The Takeaway: Watson Wyatt and WorldatWork spoke with 1,389 organizations in 37 countries about what, if any, contingency plans they had in place in the summer of 2008. With the current meltdown in the works since at least last summer, one could be forgiven for expecting American businesses to be prepared for a downturn. Instead, one third of US companies reported having no strategy worked out.

American businesses look even more remiss when compared with their foreign competitors. While 68 percent of US companies had planned ahead, the percentages among European companies were significantly higher:

France - 100 percent
Germany - 87 percent
Ireland - 85 percent
Italy - 82 percent
UK - 79 percent

American, at least, compares well to Spain, where slightly more than half (57 percent) of firms had looked ahead.

What actions were companies with contingency plans in place considering? Organizational restructuring, a hiring freeze, layoffs and slowing salary increases were all mentioned. But, again, regional differences cropped up. American firms were more likely to consider layoffs (77 percent reported looking into the option) than Europe (55 percent on average).

The Question: Why did so many US businesses have their heads in the sand?

(Image of man with his head in the sand by blakeimeson, CC 2.0)

Jessica Stillman

Jessica lives in London where she works as a freelance writer with interests in green business and tech, management, and marketing.

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