On a global scale 39% of businesses expect business results at the end of 2009 to be worse than those in 2008. In Europe even 45 % of all businesses think so. In view of these grim prospects more than one third of all businesses have frozen in wages and salaries at the level of the year 2008. If wages and salaries are cut, they are cut for all employees at any hierarchy level. This is a finding of the “Global reward in a downturn” study by the international Hay Group consultancy firm.
This is quite a dangerous development. In order to make sure that there are still enough talented and well-educated specialists availabe in a business once the economy gains momentum again, salary and wage cuts should by carried out in a strategic manner, is the advice given by Helge Benz, director of reward strategies with Hay in Germany.
In many businesses executives are particularly affected by salary cuts: More than 40 % of all businesses have frozen in their salaries or plan to do so. Across all hierarchy levels about 36% of all businesses worldwide have frozen in wages and salaries of their employees. In Europe this figures amounts to 37%, according to the study.
Almost 90% of businesses interviewed said that a possible loss of the work place is the biggest concern of employees. About 45 % of businesses plan restructuring or the cutting of jobs. About one third of all those businesses which took part in the study in Europe have already cut jobs. This is a dramatic increase as compared to 15% from November 2008.
An overwhelming majority of executives (88 % worldwide, 84 % in Europe) currently have to solve two problems: how to motivate their team members and bind them to the business? And how to bind in particular top talents and overachievers to the business?