Johannesburg, 07 Apr 2009
Mabili's latest Snap Survey on Actual and Predicted Increases for 2009 indicates that increases are likely to decrease during the course of 2009. The current economic downturn is the single biggest challenge that executives are facing, and strategies to contain staff costs are being implemented across a range of industries.
Laurence Grubb, Managing Director of Mabili Reward, has indicated that the participating companies in the survey, which have already reviewed executive increases during the month of January, specified increases at executive level of 8.1% of total cost to company. Grubb went on to note that organisations that still had to review salary increases in 2009 indicated that they predicted an increase of 7.9% for top executives.
According to Grubb: “The survey indicated that the trend of higher actual increases in January, in relation to the predicted salary increases still to occur during 2009, applies not only to executive level employees but to general staff too.”
When asked to comment on budgeted and predicted increases for 2009, the respondents showed a strong sentiment to paying below originally budgeted increases. More than one respondent noted that while they had budgeted for a 10% increase, the organisations took a decision to freeze increases for the current year.
Grubb goes on to note: “In light of the current conditions, organisations are looking to implement innovative new ways of remunerating employees in order to manage costs. We have noted that many organisations are looking to trim increases and focus on variable pay. The focus on developing variable pay structures is intended to protect organisations on the down-side, while still providing suitable incentives on the up-side.”
The survey was made up of 57 of SA's leading listed and non-listed organisations, with 25% of the respondents representing the financial sector and a further 25% of the respondents representing the manufacturing sector. Thirteen percent of the responding companies are from the construction and engineering industry, while the remaining 37% of respondents represent a range of different industries, including telecommunications, logistics, and resources. The survey indicates that 16% of surveyed companies reviewed salaries in January while almost half (43%) of the sample is due to review salary increases during April.
Mabili's survey has noted that while organisations are vigilantly managing costs, they continue to place emphasis on retaining 'hot skills' and 'key talent'. The report indicated that certain categories of staff are anticipated to receive exceptional increases in order to address critical skills shortages, and drive retention. The highest exceptional increases are predicted to be in the finance and engineering sectors. Traders and CAs are expected to receive increases in the region of 20% and 15% respectively, while in the engineering sector civil/structural engineers and project managers are expected to receive increases in the region of 18%.
The financial crisis is proving to be an unprecedented business challenge and the way in which business operates is changing rapidly. With salaries being a significant organisational expense, the role of remuneration is certainly becoming more strategic. Organisations are going to have to strike a fine balance between managing costs, and investing in talent.
For further information, please contact Laurence Grubb at tel. +27 11 292 6940; fax +27 11 884 7231; e-mail laurence@mabili.co.za.
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