In the past year and a half, compensation trends and practices have undergone the most rapid shifts in my 25+ years in the field. In late 2008 the sky was falling, as were merit budgets, and the stock market too. At the same time executive pay freezes and layoffs were taking off, and not in a good way.
A year later, the economy, while far from healthy, has stabilized and slowly started to improve.
Watson Wyatt has done an admirable job of tracking HR and compensation trends over this remarkable period. Every two months they have surveyed large groups of employers to capture the latest trends and practices of import to HR and compensation professionals. Their latest survey, "Effect of the Economic Crisis on HR Programs" (October 2009) has just been published, and below is a brief overview of some key data points. Follow the link above for the full report summary.
Employers are finally beginning to loosen the strings on the large number of salary freezes, executive pay freezes and/or cuts, and even beginning to reverse some of the cuts and freezes that were imposed during the highly uncertain times in late 2008.
For instance, of the companies that had implemented salary freezes:
- 54% say they plan to eliminate the pay freeze in the next six months
- a further 24% plan to eliminate the pay freeze in the next 12 months
Of companies that have implemented salary reductions, over 75% say they will reverse those in the next 12 months.
All of this is good news for employees and employers (less uncertainty; greater confidence). Furthermore, over 90% of responding employers have made employment offers in the past three months, and over 90% anticipate doing so in the next few months as well. These are all good signs for the recovery, but real employment growth is likely still a ways off.
All the news is not good though, as about one-fifth of employers still anticipate making layoffs in late 2009 or in 2010. This is hardly the data you would typically see in a solid economic rebound, but we believe that these percentages will decline in the months ahead.
Despite the weak labor market, almost two-thirds (65%) of employers report that they are concerned about the retention of critical skilled employees. (For a detailed discussion on this topic, request an article from StrategicPay Series manager, Doug Sayed, at doug@StrategicPaySeries.com).
Clearly, the worst is over, but we are not fully in the clear yet. The economic recovery is fragile, and many employers have yet to find their footing.
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