Cost-cutting measures are the norm now, with Singapore firms planning more cuts to cope with the crisis
As more economies launch into the next phase of relaxed lockdown measures, what organisations plan to do differently post-pandemic also vary across markets based on the severity of business impact.
Most businesses in the global survey now have greater clarity on the economic impact of COVID-19. In Singapore, 72% of companies are expecting a decline in revenue.
More organisations are also expecting a serious impact on the business – an increase from March and April. Organisations in Singapore are thus implementing or considering people-related cost containment measures.
Salary freezes are the most prevalent form of wage control both globally and in the ASEAN region. While salary cuts are less prevalent, for companies who have implemented this measure, executives are generally most impacted by reductions in compensation.
Since the last survey conducted by Korn Ferry in April, almost one in five (19%) of companies have implemented salary cuts as of May 2020, an increase from 12% previously. This figure is higher than the regional average for ASEAN firms (14%) and the global average (17%).
For companies in Singapore who have implemented or are considering salary cuts, the expected duration of salary cuts is generally three to four months.
What’s more, the extended Circuit Breaker period in May has pushed more organisations to implement or consider permanent staff layoffs and redundancies.
However, at 17% of Singapore firms, the figure is still lower than the regional average for organisations in ASEAN (19%) and around the world (24%).
These are the most common cost-containment measures here:
- Cancellation or freezing of annual salary increments (40%)
- Suspension of promotion increments (38%)
- Adjustment to planned increments for annual salary (37%)
In terms of workforce measures, more than three in five organisations in Singapore have implemented or are considering active management of paid leave.
Delaying new hires has also become the most prevalent recruitment action, with close to four in five of firms implemented or considering the measure.
“As restrictions around Phase 2 ease over the course of next quarter and businesses start to get back to some semblance of normalcy, the pressure of short-term cost reduction would reduce,” said Kartikey Singh, associate client partner, Advisory at Korn Ferry.
“Organisations will need to recalibrate their talent needs and focus on re-filling the talent gaps that are created during the pandemic. Whilst the requirement for talent might arise quicker, the pressure of salaries will continue for a bit longer as the market has an abundance of manpower resources.”