FINANCIAL SERVICES COMPANIES FREEZE HIRING BUT NOT PAY
Financial services companies are stopping hiring and are implementing organisation-wide restructuring, but are not expecting to introduce widespread pay freezes in 2009, according to consultants Watson Wyatt.
A survey of participants at a recent Watson Wyatt Financial Services Seminar found that 29% of UK financial services companies are restructuring across their organisation and 27% are implementing hiring freezes to deal with the economic downturn. Other plans include increasing restrictions on company travel (15%), restructuring the HR function (13%) and eliminating or reducing training programmes (8%).
Just one company in the survey of 50 companies is planning to introduce a pay freeze. Indeed, over 80% of companies forecast their pay review budget to increase in 2009 by three per cent or more.
“In 2008 financial services companies have been facing the twin pressures of high inflation forcing up pay settlements and uncertain economic times reducing available budgets,” said Iain Nichols, a senior consultant at Watson Wyatt. “Most companies have been forecasting increases in the range of 3 to 4%, lower than in previous years but with rapidly decreasing inflation we now expect this range to reduce further by the time salary increase budgets are signed-off.”
Unsurprising, the majority of financial services companies are forecasting lower bonuses in 2009. Some 16% say they are looking to introduce greater differentiation in pay schemes to retain and motivate key employees. While bonus budgets are decreasing, higher performers may receive a proportionately higher award.
“Our flash survey shows that far from the ‘wait and see’ attitude that was adopted by some companies when the financial crisis first broke and developed, companies have now taken contingency steps and are developing their plans for next year’s business,” said Iain Nichols. “So far, it appears that companies have leant from previous recessions and are not taking one particular route. Instead they are adopting a basket approach of measures.”
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