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RI firms strive to retain high performers
The current adverse global economic conditions are taking their toll on businesses, with 69 percent of companies operating in Indonesia considering decreasing or having already reduced budgeted salary increases for next year, according to a survey
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The current adverse global economic conditions are taking their toll on businesses, with 69 percent of companies operating in Indonesia considering decreasing or having already reduced budgeted salary increases for next year, according to a survey.
The move was a logical consequence of the fact that less and less companies are optimistic that they would reach their short-term performance targets in the midst of an economic downturn, according to the global consulting company HayGroup.
Still, the survey says, the percentage of Indonesian firms considering cutting or having already cut salary increase budgets is lower than the averages of 83.4 percent and 88.1 percent in Asia and global, respectively.
HayGroup carried out the global study, called the Global Employee Pay and Staffing Survey, in November covering 2,589 organizations across 6 continents, with more than a quarter of respondents based in Asia.
Among the countries and areas surveyed, Africa and the Middle East were the least affected by the global economic downturn, with only 9 percent of African companies and 12 percent of Middle Eastern companies reporting business results significantly below target.
One piece of good news from the study was that more than two thirds of companies surveyed are not revising their short-term variable payments programs covering incentives, bonuses and profit-sharing, for 2008.
Nugroho Irawan, reward practice leader for HayGroup Indonesia, said, "Companies are generally wary about cutting incentives and bonuses as this rewards employees for their past performance."
"As bonuses are already accrued during the year, it was more financially prudent for companies to pay out bonuses than salary increases which would immediately impact next year's bottomline," Nugroho said.
Moreover, a big percentage of Asian employers surveyed are keeping healthcare, 83 percent, and pension benefits, 94.7 percent, intact.
Also, employees who have consistently performed well need not worry as more companies in Asia are increasing their investments to retain their high-performing employees, compared to their counterparts in other continents.
Asian companies are using their salary budget more strategically to reward performance. Indonesian firms surveyed have doled out an average of 25 percent in base salary increases to their high-performers in 2008, which was half the average for Asia.
"This trend is a reflection on the shortage of highly-skilled talent in Asia," Nugroho.
The study also showed that globally, retail is one of the hardest-hit sectors, with 63 percent of retail respondents expecting poor business results due to reduced consumer spending and a tightened credit market.
Other industries, such as oil and gas, have been able to weather the downturn more successfully. About 19 percent of oil and gas respondents expect business results to be better than the previously projected levels.
