The majority of U.S. companies are making multiple adjustments in their pay and hiring programs for both executives and employees in response to the financial crisis, according to a new survey.
Salary freezes have been completed or contemplated by about four in 10 U.S. companies, professional services firm Towers Perrin found in a survey of 513 companies. Among the companies that are not freezing their 2009 salary budgets, the average overall pay increase this year has declined to 3 percent from the 3.7 percent that companies were contemplating before the financial crisis.
About 54 percent of the companies surveyed paid smaller bonuses for 2008 performance than the prior year, and 40 percent of the survey respondents expect to pay executives bonuses that are 25 percent or more below last year’s levels. Almost three-quarters of the survey respondents said that the financial crisis has had an impact on their approach to setting 2009 performance targets under their annual incentive plans.
Seventy-four percent of the companies surveyed have either instituted or contemplated hiring freezes or reductions, while 58 percent are mulling targeted staff cuts focusing on less critical roles and poor performers. Reductions in travel and entertainment have been made or contemplated by 82 percent of the respondents, while 75 percent are targeting employee events, and 58 percent are considering cutting back on training.
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