Decline in layoffs expected? Believe it when I see it.

The jobless rate hit a new 26 year high and it appears that big business is resigned to the prediction that it will be a long haul. But a new survey by global consulting firm, Watson Wyatt, suggests that the bloodletting will eventually subside as companies simply can’t operate efficiently if they cut anymore to the bone.

“Companies have come to terms with the fact that this recession is going to last and that they can’t slash their way out of it,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. “Many companies are putting the drastic cuts behind them and are now focusing on smaller, more sustainable cost-cutting actions.” 

Salary and hiring freezes seem to be the norm as companies buckle down in an economy which doesn’t appear to be turning around anytime soon. But here’s the caveat to what appears on the surface to be better news; the companies surveyed were large U.S employers. For smaller businesses the story might be drastically different. Such a case came my way last week when I spoke with a colleague, who worked for a company, that once employed about a hundred people.

Joe was the  lone survivor in the video production unit of a commercial advertising company in southern California. He watched in horror as his unit went from 15 people to only himself running things with a select few freelancers. It happened over four months.

Assured that he was a valued player by his management, being the last skilled production person left at the company, he went out of his way to go the extra mile. The company was behind in paying expenses from trips that he put on his credit card, even payroll was consistently behind, but Joe hung in there. He sacrificed any sense of work life balance and became a stressed out ball of angst.

Then on a thursday afternoon while he was working from home he received THE CALL. They were letting him go after, in effect, lying to him , in order to keep the company’s business afloat.

Even in the face of the dwindling workforce this company kept its poker face going until the eleventh hour.

While this survey from Watson Wyatt is a bright spot in a sea of chaos, it doesn’t reflect the full picture. We’re a WorkLife Nation with a growing base of small business and entrepreneurs. It’s almost impossible to track the direction of those sectors as the recession deepens. Hold onto your hat, might be a longer ride than we think.