About that raise …

Two recent surveys offer interesting insight into how company executives around the world are dealing with the global recession.

A study by Grant Thornton, one of the world’s largest accounting firms, found that 65% of senior financial executives said their employees will not get raises in 2009, and that 40% had some concern about their company’s ability to continue operating in its current form. Grant Thornton surveyed 530 corporate financial officers in late March and early April.

When asked to rank the pricing pressures that most concerned them, 76% picked employee benefits, 35% picked energy costs and 30% picked raw materials costs.

Other survey questions included:
• Where are you cutting costs?
65%: Not giving raises this year
60%: Refining processes and streamlining
59%: Cutting back on recruiting/hiring
56%: Reducing business travel
53%: Reducing headcount

• Are you having difficulties accessing credit in general?
32%: Yes
68%: No
 
• Have you had to return to bank credit because you no longer can access alternative financing structures?
15%: Yes
85%: No

An early April Hay Group Global Survey indicates that 34% of U.S. respondents plan layoffs, up considerably over the 19% who planned layoffs in the November 2008 survey.

The survey also found that 37% of U.S. companies are turning to wage freezes and modest salary increase budgets to reduce labor costs. A little more than half of U.S. respondents report their executives will receive no salary increase this year.

A total of 2,000 organizations from 88 countries across six continents participated in Hay Group’s latest survey.

Other survey results include:
• Retirement program reductions: One fifth of organizations with either defined benefit or defined contribution retirement programs are reporting that they are considering changes to the value of these programs. Of organizations making changes to their defined contribution plans, the vast majority (78%) of U.S. respondents report they are considering decreasing the benefit levels of these plans.

• HR programs hitting the chopping block: Training and development programs are being decreased or eliminated by 22% of U.S. respondents. Companies are also cutting overtime wages (21%) and the use of contract laborers (32%).

• Renewed focus on severance programs: Nearly 40% of surveyed companies either made or considered changes to their severance programs in the last year, according to another Hay Group study conducted in February 2009. Of these companies, 39% considered making their programs more generous rather than less.