Experienced staff approaching retirement are threatening to bow out of work early as bonuses and pay increases look unlikely this year, Personnel Today has learned.
At the annual Chartered Institute of Personnel and Development Reward Conference in London yesterday, the institute’s president Vicky Wright said board members and upper management who survived the recession of the late 1990s were extremely valuable in helping organisations recover today.
But many skilled senior staff on defined benefit (final salary) pensions who are approaching retirement don’t want to wait out the recession if they feel they won’t get appropriately rewarded, Wright told Personnel Today.
“If someone is in their late 50s, on a final salary pension, and they know there won’t be a pay increase this year or that bonuses won’t be at their previous levels, the mentality is that, ‘it’s tough, why should I do it?’,” she said.
“Experts are quite certain this will not be a V-shaped recession [one that recovers quickly], that it will be deep and it will last for several years,” she added.
Research out last week found one in six pay settlements in January amounted to salary freezes. Employers in the media sector, including the BBC and Channel 4, have been some of the worst hit, suspending bonuses for some staff as well as halting pay rises. Others sectors hit by pay freezes include manufacturing, chemicals and finance.
Wright warned organisations to consider implementing longer-term reward packages spanning several years to keep senior, experienced staff.
“HR needs to present very robust arguments at this time about rewarding senior staff to retain that experience that is essential to survive this recession,” she said.
Wright also questioned the ability of organisations to successfully manage talent during a dowturn.
“Many successors would have been great in the climate of growth we experienced for the past 15 years. But many are now less ready to take over than before,” she said.