Companies likely to cut planned salary hikes

Forward by Divakar

New Delhi: Here is a bad news again for employees as many companies are likely to move away from the planned salary hikes in 2009. Indicating further reduction in work force, a recent Mercer survey says companies have conceded that workforce reduction would occur and hiring would become more selective and skill- based.

Of hundreds of human resource and finance professionals in India surveyed, 83 percent believe that their companies have planned to look closely at holding down the level of compensation increases and salary increases are likely to be lower than originally planned in 2009. But surprisingly, very few Indian companies surveyed are considering the more drastic step of freezing 2009 salaries at 2008 figures, with 19 percent of survey respondents saying that such a step is likely and 24 percent saying a salary freeze is somewhat likely.

Half of the Indian respondents say that their company is likely to reduce previously budgeted 2009 bonus payouts for performance in 2008. "It is now time to plug gaps where mediocre performance has been rewarded with high pay. Companies need to drive robust performance management and adopt a performance-based reward strategy. Employees should increasingly focus on acquiring new skills and developing an entrepreneurial mindset," opined Padma Ravichandar, Country Leader, Mercer Consulting (India).

The survey also focuses on human resources and says that in an environment in which they are asked to operate with reduced resources, HR continues to be considered core strategic to most companies' business. 27 percent of the respondents said their companies plan to maintain their investments to improve the overall HR services.