Compensation Cost Control Around the Globe

Companies around the world are grappling with the best ways to reduce costs as the economic downturn continues, but a new study reveals some interesting regional differences in the prevalence of particular actions being taken.  The survey, conducted by Hewitt in late 2008 and covering over 2,000 employers in 40 countries, examines compensation cost management strategies across four major global regions.

Some findings from the Hewitt study:

Salary increase reductions

Salary spending is being reduced in all regions of the world, with Europe at the head of the pack in this regard and U.S. companies reporting the lowest relative proclivity for salary increase cuts

• Asia-Pacific: 58%

• Europe: 67%

• Latin America: 63%

• United States: 50%

Hiring freezes

Hiring freezes appear significantly more prevalent in Europe and Latin America than they do in the Asia-Pacific region or the U.S.

• Asia-Pacific: 42%

• Europe: 63%

• Latin America: 66%

• United States: 39%

Pay freezes

As was true with hiring freezes, pay freezes appear to be more prevalent in Europe and Latin America than in the Asia-Pacific region or the U.S.

• Asia-Pacific: 6%

• Europe: 20%

• Latin America: 23%

• United States: 10%

Layoffs

European companies are twice as likely (or more) as those in other world regions to report that layoffs are being taken as a step to reduce compensation costs.

• Asia-Pacific: 19%

• Europe: 69%

• Latin America: 33%

• United States: 35%

Salary cuts

The Asia-Pacific region and the U.S. report salary cuts with lower frequency but with more of a tendency to go "across-the-board"; cutting salaries for all employees.  Europe and Latin America report a higher frequency of salary cuts for executives and virtually none for employees.

• Asia-Pacific: Executives 4%, All Employees 2%

• Europe: Executives 9%, All Employees 0%

• Latin America: Executives 9%, All Employees 0%

• United States: Executives 1%, All Employees 1%

Increasing time between increases

This cost control strategy appears to be virtually nonexistent among participating U.S. companies, but more prevalent in Europe and Latin America. 

• Asia-Pacific: 12%

• Europe: 29%

• Latin America: 22%

• United States: 0%

Reducing promotions

Asian-Pacific, European and Latin American companies are more likely than their U.S. counterparts to pursue this as a cost control activity.

• Asia-Pacific: 28%

• Europe: 28%

• Latin America: 23%

• United States: 17%

Interesting data, yes?  What are your takeaways?

 

Comments

[John]

Some Hotels in Ireland and re-opening under new management.

They are not employing the previous employees because they are too expensive but employing new personnel at vastly reduced wages. Perhaps at the minimum wage, some say even less than that.

[Wally Bock]

Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2009/02/18/21809-midweek-look-at-the-business-blogs.aspx

Wally Bock

[Ann Bares]

Thanks, Wally for the recognition in the Midweek Review. Readers, be sure and click through to check out Wally's selections - he does the heavy lifting for us and brings us the best of the blogosphere each Wednesday!