Magazine article Personnel Journal

1994 Economic Forecast

Magazine article Personnel Journal

1994 Economic Forecast

Article excerpt

The U.S. has been out of a recession for two years, but you wouldn't know it by the newscasts and newspapers that are still filled with economic doom and gloom. "The combination of cutbacks in defense spending, corporate restructuring and weak economies overseas have put a damper on the economic growth in the U.S.," says Robert J. Eggert, editor of Blue Chip Economic Indicators, based in Sedona, Arizona. Slow and sluggish is the way that Eggert describes the recovery that the U.S. economy will experience in 1994. However, that doesn't mean that the U.S. is headed for another recession. "It just means that we're not going to experience the rapid growth that normally follows two and three years after a recession," he says. The good news, says Eggert, is that slow growth in the economy means slow growth in inflation. His board of economists is predicting a 3.2% increase in inflation next year.

What does this forecast mean for the human resources function? No one really knows for sure. As Lynn Nemser, president of Partners in Performance Inc., a Pittsburgh-based HR consulting firm, puts it, "We live in unpredictable times. There's so much change that it makes it very difficult to predict anything."

Despite this uncertainty, there are a few major trends in store for 1994--continued downsizing and belt tightening. There's no doubt, says Barbara Jack, manager of information services for the Saratoga Institute in Saratoga, California, that HR will feel the pinch. She predicts that HR staffs and budgets will decrease in 1994 (see "HR Trends," this page) for one simple reason. "HR professionals are still running their programs without regard to how they're really adding value to their companies," says Jack.

HR executives will be forced to do more with fewer resources. Nemser predicts that 1994 will continue to mark the return of the HR generalist. CEOs will want HR professionals who can wear several hats at the same time--know how one area of HR, such as compensation, affects another area, such as quality. "HR staffs have been and will continue to be downsized so much that HR professionals will have to be multi-specialists," says Nemser.

Most experts agree that doing more with less will continue to increase the use of outsourcing. HR executives and their staffs are realizing that they can't do it all. "There's a movement to gain control over policies and cost, and one of the means of accomplishing that is by looking at alternatives outside of the company," says Tom Peiffer, executive vice president of the Living Cost Division for Rochester, Wisconsin-based Runzheimer International. …

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