Astron Solutions will not be participating in any trade shows until
2009. But fear not – we will be active giving presentations until then!
On November 19th, National Director Michael Maciekowich will
be presenting to PMA (NY State Association of ARCs) on November 19th.
The meeting will be held in Schenectady, NY. Mike’s presentation is
“Uniting Career Paths and Succession Planning: Strategic Use in
Employee Retention for Non-Profits.” Need more information or have any
questions about this presentation?
E-mail here.
We hope to see you there!
Astron Solutions thanks you for going out and making sure your voice
was heard! With a record turnout at the polls during our November
elections, it’s great to see such enthusiasm about what makes America
so great. Until next time, vote early and vote often!
Over
the past few weeks Astron Solutions has received inquiries regarding
the impact of the current economic downturn on 2009 compensation budget
planning. Initially we had heard very little from the field. In the
past week, however, a number of Human Resource organizations have
published “instant survey’” results from their client bases. The
following is a summary of these findings along with a link to their
website for further review.
Watson Wyatt
Watson Wyatt conducted their economic impact survey in October, 2008.
248 U.S.-based organizations responded. Key findings include the
following: • 86 percent of respondents
reported they expect recent events in financial markets to affect their
HR programs in the next 12 months. • Increased communication around benefits is the change most
organizations have made so far. Other top actions already taken include
restricting travel policies, instituting hiring freezes, raising the
employee’s contribution to health care premiums, and layoffs. • Over the next 12 months, one in four organizations expect
layoffs or reductions in force (26 percent), hiring freezes (25
percent), and increases in employee contributions to health care plans
(25 percent). • 28 percent of organizations are revisiting merit increase
budgets for 2009. Those that are making changes are decreasing budgets
by an average of 32% (3.7% to 2.5%). • On average, short term incentive funding is dropping from
95% funded in the previous year to 81% funded in the current fiscal
year. • More than half the organizations responded that their employees are moving 401(k) portfolios out of equities.
Business & Legal Reports
In an article published by Bob Brady, CEO & Founder of BLR, BLR
revealed the following information regarding the impact of the economic
downturn on compensation programs. BLR’s survey included data from 518
organizations. • BLR’s survey indicates that
the average merit pay increase scheduled for next year is now 2.8%.
That’s down almost 25% from the 3.71% increase employers reported in
June 2008. • The BLR survey, launched October 24, found that 38.5% of
respondents are changing their pay budget plans because of the economic
situation. Another 32.5% said that changes are “under consideration.”
Only 23.6% said they are not changing their pay budget plans. • BLR’s findings are similar to the results of a recent
survey conducted by Hewitt Associates. Hewitt found that 42% of the 411
organizations they surveyed were revising their salary budgets
downward, with an average decrease of 1 percentage point. That brought
projected pay raises for 2009 down to 3.1%—the lowest seen since 9/11. • Of the changes being planned by respondents to the BLR
survey, reducing the pay budget topped the list (37.3%), followed by
smaller or no increases in an organization’s rate ranges (34.4%), a
freeze on all raises (24.4%), and delaying the effective date of raises
(15.3%). • Most of the 518 respondents (72.1%) were with for-profit
organizations, 19.4% were with not-for-profit organizations, and 8.5%
were with government agencies. The largest single segment (36.3%) was
organizations of 100–499 employees. • You can
click here to view the actual survey results.
William M. Mercer
On Monday, 11/17, Mercer released its 2008 / 2009 US Compensation
Planning Survey Update. The survey’s key findings are as follows: • Interestingly, 56 percent
of respondents indicated that they would not be changing their salary
increase budgets from amounts reported during the April 2008 survey
data collection period. • Among those organizations that are planning a change to
their budget, the average merit increase budget is 0.2 to 0.3
percentage points lower than those reported in April. At the high end,
executive pay increase budgets have dropped from 3.9% to 3.6% among
organizations planning a budget decrease. At the low end, salary
budgets for trades / production / service employees have dropped from
3.6% to 3.3% among organizations planning a change to their pay
increase budgets. • The most common ways for organizations to address the
economic downturn are curtailing overall hiring to below replacement
levels through 2009 (48% of respondents) and reducing the workforce
through 2009 (40% of respondents).
Astron Solutions’ View:
Your Astron consulting team has been listening carefully to our clients
to ascertain how the economy will be impacting 2009 compensation
budgets. Based on an informal review we offer the following insights. First, most organizations want to hold the line on their
2009 compensation planning budgets of 3.0% - 4.0%, depending on the
industry, if at all possible. The danger with a dramatic compensation
budget reduction is the potential of losing any competitive advantage
when the economy experiences an upturn.
The major concern is in protecting “mission critical”
employees during this period. Mission critical employees and jobs are
essential for the organization to accomplish its primary mission and to
remain viable during this period. In some cases mission critical is
defined by a skill set. In other cases it is defined as those employees
who continue to go well beyond what is expected and have taken personal
responsibility for the survival of the organization. There are a number
of strategies to be looked at for this group:
• Maintain the budgeted increases for this group of jobs and reduce compensation increases for others.
•
Reduce the overall compensation increase budget but have available
special discretionary bonuses to recognize the efforts of this group. Many organizations seek external expertise to better
understand how they should deal with this economic environment. Astron
Solutions recommends the following steps. First, there needs to be a
meeting with the senior leadership team to review the issues at hand as
well as the trends from the surveys referenced here and others that may
be more applicable to your industry set. This meeting should have as
its outcome an agreed to “economic crisis compensation strategy” that
will act as a blueprint for decisions in the next year or two. Then, an
extensive communication plan should be instituted to begin a dialogue
with all levels of employees regarding the current economy and its
impact on human resource programs. Astron Solutions recommends focusing
on the following groups:
• First: Management overseeing mission critical positions and employees
• Second: All management staff
• Third: Employees in mission critical positions
• Fourth: Long-term employees whose continued loyalty is critical
The purpose of these meetings should be to not only provide critical
information impacting employees’ future employment and compensation but
also to discuss how they can be part of the problem solving process. Lastly, Astron Solutions recommends the following in
terms of the hierarchy of decisions in order to survive the current
economic downturn: 1. A hiring freeze,
accompanied by the establishment of strict controls as to how vacancies
are approved, allowing mission critical positions to be filled first. 2. Efficiencies in all other parts of the organization’s expense budget.
3. Reduction of planned increases with the exception of mission critical staff.
4. Reduction of planned increases with a discretionary incentive for mission critical staff.
5. Layoffs of non-essential staff.
We know that this issue is very industry specific. The information
provided in this article is only a small part of the help you need as
you make critical decisions for 2009. We will continue to keep you
apprised of breaking compensation trends through Astronology, our blog,
and Twitter. If you haven’t explored our breaking news services, please
be sure to visit our blog
http://astronsolutionsworldofhr.blogspot.com/ and our Twitter feed
http://twitter.com/astronsolutions and sign up to receive our posts from both. That way, you can be fully prepared to face the current economic storm.
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Copyright 2008, Astron Solutions, LLC
ISSN Number 1549-0467
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