It's no wonder employees have worked themselves up in a tizzy these days, worrying about the security of their jobs and salary cuts. What else could they think, when stories of layoffs, steep budget cuts, slashed earnings and bankruptcies lead headlines literally every day?
But HR consulting firms Buck Consultants and Watson Wyatt Worldwide say the fate of all workers isn't necessarily as grim as those headlines may indicate. Watson Wyatt points to the results of a recent survey it conducted, claiming that while 86 percent of companies expect the turmoil in the financial markets to affect their HR programs over the next year, this doesn?t necessarily mean that they're all going to the extreme of throwing bodies overboard. The survey showed that although a quarter of US companies are planning to slash jobs, most are turning instead to less drastic cost-cutting measures. For example, over one-third are planning to increase their communication around pay (37 percent) and benefits (35 percent), hiring freezes (25 percent) or raising employee contributions to health care plans (25 percent). Other budget-conscious measures include travel restrictions, and restructuring and reductions in training. Few companies said they expect to freeze salaries, reduce 401(k) matches or close their pension plan. The most heavily represented industries in this survey were manufacturing, health care and financial services/insurance.
(For additional reading on financial crises and their effects on employers and employees alike, Watson Wyatt offers a summary of its research. There, you'll also find an I-told-you-so report, which the firm says foreshadowed key elements of the financial crisis. It's a little late now, but that'll be good to keep around for next time.)
Buck Consultants offers another less-than-worst-case scenario, finding in its "Compensation Planning for 2009" survey that average salary increases for fiscal year 2008, and those planned for 2009, are consistent with plans developed in 2007. The survey had originally been conducted in mid-2008, but with the recent shake-ups, Buck went back and asked companies to confirm their compensation plans. Of the 102 respondents who answered the follow-up questions (from the original pool of 314), only 16 percent reported that their plans had either changed since mid-2008 or are now under review.
For those companies revising their pay structure, cuts seem to be focused on the incentive payments. The survey also showed a shift away from individual and discretionary bonus plans to those based on business unit, group and team performance. While half of respondents said payments were likely to be the same as in 2007, 26 percent said payouts would likely be smaller, and 5 percent said fewer employees/managers would receive incentive payments.
The bottom line is we still don't really know how the financial crisis will affect employees across industries. It's good news for those in HR consulting, though, who have a busy road ahead of them, sorting through all the data and breaking it down for the rest of us.
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