DESPITE SHARE price declines, most companies in Asia are currently planning a modest scaling back of their rewards programs and other workforce investments for 2009.
Current economic pressures are forcing many companies to reassess their compensation programs to find ways to cut costs, according to recent Towers Perrin research of more than 300 companies across Asia. “While the hope for Asia ‘de-coupling’ from the West has waned, companies in Asia are still planning greater investment in their employees,” said Todd Lippincott, managing principal of Towers Perrin’s executive compensation and rewards practice for Asia. He says more than 90 per cent of companies in Asia are still planning base pay increases for 2009.
“Obviously, companies are monitoring market developments very closely and are revising their plans accordingly. However, a consistent theme across Asia is that companies are pursuing organisation-wide cost containment approaches versus mass layoffs,” said Lippincott.
“And companies are continuing to allocate an even larger part of their people investments in higher growth markets such as China and India– markets where talent remains scarce.”
While cuts to bonus and salary increase pools may be preferred to mass workforce reductions, organisations recognise the importance of rewarding key talent.
The survey found that 60 per cent of companies are concerned about turnover of their high-performing and business-critical employees as a result of the way the organisation handles the economic crisis.
Across the region, more than two thirds of companies will allocate a larger portion of their 2009 compensation budgets to high performers to ensure longer-term continuity.
Companies are also handling HR-related issues related to the current market turmoil individually and strategically, rather than following the general “one-size-fits-all approach”witnessed in other economic crises.
Furthermore, 46 per cent of companies indicated they were likely to cut training. “Cuts in training may significantly undermine employee morale and engagement,” said Lippincott.
“Though some reduction in training budgets may be inevitable, they should be surgical in nature. Training and development for top talent and critical employees is the most important way to drive engagement in the region.”
In a tougher and more demanding marketplace, Lippincott said, an engaged workforce is increasingly important.
“It would be counterintuitive to disengage, and potentially lose, the most important sector of your workforce and the future of your company in order to cut short-term costs.”
Organisations across Asia are also taking noticeable steps to cut discretionary costs in 2008 and 2009. More than 60 per cent of companies are likely to scale back this year’s holiday party and other employee events to save money, while 75 per cent plan to cut spending on travel and entertainment.
Patrick Tham,China market leader of Towers Perrin, said companies appear committed to growth and employee investments in the region,while moderating their future plans.
“Companies will need to balance cost pressures with serious concerns about retaining talented employees and maintaining employee engagement,” he said.