TM - April 2008 - (Page 62) was 91 percent. This leaves a relatively small percentage of U.S. and Canadian organizations that are considering or have already reduced their compensation budgets since the last quarter of 2007. Avoiding Extremes Despite growing economic uncertainty, companies have to consider whether extreme responses such as salary and hiring freezes or downsizings are really the right things to do to ensure long-term business results. Orga- Taking a total rewards point of view, which encompasses base pay, benefits, career development and work environment, companies are better off looking toward the future — with appropriate focus on succession and career planning — rather than leaping at short-term fixes. This is a way to shelter high-value employees by providing them with a strong sense of future opportunity within the organization once the economic pendulum swings. It also helps employers recognize more precisely what employees value —more flextime, for example, as opposed to cash. HR Strategy Initiatives A significant 85 percent of U.S. employers indicated they have made no budget changes in anticipation of a slower economy; in Canada, the proportion was 91 percent. nizations tend to be better off if they take a holistic, totalrewards approach and embrace more surgical, strategic options, such as allocating incentives to focus more on high-performance and high-potential employees rather than on those who have yet to deliver on their promises. Since measures such as pay freezes affect both high and low performers, it’s important to discriminate in the allocation of rewards. For example, even companies that must enact some sort of wage freeze need not freeze all pay. Freezing the first 3.5 or 4 percent of salaries can protect the highest performers from being negatively impacted and can help ensure retention of those employees a company cannot afford to lose, especially once the economy rebounds. April 2008 The Mercer snapshot survey also indicates employers are considering or are instituting broad HR initiatives as a result of the uncertain economic climate. Responses suggest companies are taking action or preparing to take action to protect and strengthen their talent programs. For example, more than 40 percent of the United States and Canadian organizations indicate they are considering or implementing initiatives such as creating new talent sourcing programs, building pipelines of highvalue candidates, retaining high performers and maintaining historic levels of employee engagement. In Canada, increasing training and development programs also was highlighted (slightly less so in the U.S.). Other initiatives to optimize HR efficiency, recalibrate performance targets/policies and enhance incentive programs, also were cited by a significant share of survey respondents. Overall, the Mercer survey suggests employers have learned lessons from previous downturns and are less prone at this stage to quickly institute extreme measures. Instead, they appear to be focused on managing aggregate staff costs rather than scaling back existing compensation plans. And while only a small number of employers may be expanding incentive eligibility or opportunity within existing plans, most are trying to ensure they have appropriate performance targets, measures and policies in place, or they are looking at new or enhanced variable pay programs. Perhaps the most encouraging news of this survey is the majority of employers are not exhibiting a knee-jerk response to today’s economic uncertainty, but are instead looking more strategically at tomorrow and focusing on the talent acquisition and retention strategies that can sustain their businesses well into the future. Steve Gross is a partner with Mercer and leads the firm’s performance and rewards consulting globally as part of Mercer’s human capital business. He can be reached at editor@TalentMgt.com. 62 talent management magazine www.TalentMgt.com http://www.TalentMgt.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.