Many U.S. employers are planning to use compensation incentives to limit “post-recessionary employee flight”, according to a survey of HR decision-makers by Workscape. The survey conducted at the end of March, 2010 found that 65% of the 476 respondents are considering or strongly considering pay increases to drive retention as the economy recovers, while 46% will consider benefits increases. 79% of those polled or interviewed represented companies with less than 5,000 employees; 7% represented organizations with 5,000 to 10,000 employees; and 13% represented companies with more than 10,000 employees.
Looking back, only 10% of organizations cut employees’ pay as the recession entered its third year in 2009, but 39% froze compensation, respondents indicated. The vast majority of those that awarded increases held them to 3% or less, and only 2% or respondents said their organizations increased average compensation by 5% or more.
Respondents who siad their organizations intend to provide incentives to retain and engage employees as the economy improves are most likely to offer:
- Merit increases (66%)
- Performance-based bonuses (52%)
- Market or equity adjustments (24%)
- Lump sum payments (12%)
Source: SHRM, HR Magazine, Stephen Miller, July 2010, pg 11
Many U.S. employers are planning to use compensation incentives to limit “post-recessionary employee flight,” according to a survey of HR decision-makers by Workscape, a provider of employee performance, compensation and benefits administration services, conducted at the end of March 2010. According to the survey report, Managing Employees and Total Rewards during the Economic Upswing, 65 percent of respondents are considering or strongly considering pay increases to drive retention as the economy recovers, while only 46 percent will consider benefits increases.
Looking back, only 10 percent of organizations cut employees’ pay as the recession entered its third year in 2009, but 39 percent froze compensation, respondents indicated. The vast majority of those that awarded increases held them to 3 percent or less, and only 2 percent of respondent organizations increased average compensation by 5 percent or more.
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Source: HR.BLR.com
While an employee who is an average performer rarely considers leaving his or her job during a difficult economic period, high-potential employees do, according to research by Sirota Survey Intelligence.
The firm has found that the actions taken by employers during a recession can start a process that unintentionally devalues employees (by seeing them as costs to be controlled, rather than assets to be valued). For example, many companies will centralize decision-making, control information, reduce entrepreneurial risk-taking, and reduce (or eliminate) discretionary rewards–and this makes it more likely that high performers will defect.
“Programs for high-potential employees often seek to involve them in the strategic decision-making, challenge their abilities, develop/advance them quickly, and recognize/reward them generously,” said Douglas Klein, President of Sirota. “The business choices many companies make when responding to a recession can frustrate all of those goals.”
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It makes sense to think that an organizations top performance priority would receive proportionally allocated funding to achieve its mission. I’m in marketing and my top priority objective is lead generation. Therefore it should come as no surprise that when I prepare a strategic plan and budget forecast that the largest wedge of budget pie sought is to fund lead generation initiatives. That just makes sense.
That’s why the results of a recent HR priority vs. funding survey from BNA took me by surprise. Why would human resources priority vs budget allocation equation be any different?
Case in point: Recruiting and Retention. Human resources executives most commonly cite their department’s performance in recruiting and retaining employees as the primary factor in how top management evaluates HR’s contribution to the organization. But despite the importance assigned to recruiting, budgets are stagnant and the systems deployed are often inadequate.
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