Every other article we read or news bulletin we watch seems to be about the expected credit crunch, and it was only a matter of time before the business world began to tighten its belt.
A study by management consultancy Hays Group has shown that although most companies have not fully felt the impact of current economic events, 16% expect business results to be significantly worse than budgeted levels.
The study, which spanned 1,003 companies in 80 countries, revealed that more than 30% of companies are freezing or considering freezing base salaries as a direct result of recent economic events.
Tom McMullen, vice president at Hay Group, says:
“Even more alarmingly, globally 15% of organisations reported that they were freezing salaries for all employees.
Short of layoffs or salary cuts, this is as serious as you can get in terms of sending out distress signals.”
In addition, the study found that 20% of organisations would be freezing or decreasing staffing levels in the near future.
Yet when companies were asked about their primary concerns regarding engaging and retaining key employees during challenging economic periods, they identified retaining and motivating key contributors as their number one concern. 38% of companies indicated that they have either made changes or are making changes to their high performer retention programs.
McMullen added that:
“An analysis of the forecast for next quarter, coupled with the impact of this report, could be the catalyst for much more serious economic measures.”
