Hay Group global survey, April 2009
The March 2009 Reward in a downturn survey reveals a deepening recession that has become truly global, and which is affecting the pay, benefit and job prospects for employees at all levels throughout the world. Pay has been affected in all countries, with salary increases at or below inflation rates, even in previously fast-growth economies. Salary freezes have become very common with employees in 36% of companies globally facing salary freezes, and actual or proposed salary cuts looming for others.
If the global downturn continues to deepen then the following scenarios are real possibilities for the rest of 2009 and beyond:
- An increasing number of companies will impose salary freezes
- A growing number of employees will face the choice of either accepting pay cuts or facing job losses
- Pay-out levels from bonus schemes will fall further
- Companies will increasingly look to cut their contributions to pension schemes, and the trend away from defined benefit schemes will accelerate
- Other benefits (such as medical insurance, car schemes etc) which have been spared review so far, will come under scrutiny.
In a growth market, some companies were able to take a simplistic approach to pay, relying largely on benchmarks (internal or external) plus set annual increments to determine salaries. The downturn will force many of those companies to adopt a more strategic approach to reward based on their strategic goals, ability to pay and critical talent needs, in addition to market comparability.
Hay Group has conducted global surveys in March and November 2008 and again in March 2009 to monitor the changes organizations are making to their reward programs to cope with the downturn. Explore the links below to learn more.
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