Evolving Compensation Strategies for an Uncertain Economy: The 2009/10 Global Compensation Planning Report

Economic uncertainty continues to present talent and reward challenges for employers worldwide. After a year of reduced salary budgets and widespread pay freezes, companies concerned about retaining and motivating their key people are grappling with difficult decisions about a range of complex reward issues:

• how to handle incentive compensation for the current performance period and going forward, given financial and operational results below historical norms
• what to do about "temporary" changes (e.g., pay freezes) implemented at the height of the financial crisis
• how to respond to continuing pressures on salary budgets while retaining key talent and top performers, and sustaining engagement broadly across a downsized workforce.

While salary budgets will remain tight in 2010, many companies around the world plan modest increases for the coming year, according to the Towers Perrin 2009/10 Global Compensation Planning Report, based on 4,500 responses from companies in 76 countries.

The survey sheds light on:

• overall salary movement for 2009 and projections for 2010
• structure adjustments for 2009 and projections for 2010
• percentage of companies freezing salaries
• key economic indicators, including gross domestic product (GDP) growth and inflation.

Consistent with GDP growth forecasts, our global survey findings indicate that 2010 salary budget projections point to a return to pre-crisis levels in most countries. However, some countries (e.g., China, India, Indonesia and the Philippines) that experienced double-digit budget growth in 2008 still project more restrained budgets in 2010.

The exhibit below shows the 2009 actual and 2010 projected change in salary budgets for selected countries. Not surprisingly, companies in financial services and other industries facing the most severe business challenges in the recession (e.g., autos, consumer products, high tech and industrial manufacturing) saw more salary decreases and freezes globally than others. These figures include only those companies granting increases. The full report also provides results for companies that froze pay in 2009 (typically 40%-45% of companies) or plan freezes in 2010 (typically 5%-10% of companies).

Towers Perrin's global compensation planning survey was conducted online in July and August 2009. The broad range of company responses included 1,500 in the Asia/Pacific region; over 2,800 in Europe, the Middle East and Africa; 320 in Canada; 555 in Latin America; and over 650 in the U.S.

Towers Perrin provides insights and expertise to help organizations strike the right balance between talent and cost management, including up-to-date research on how compensation strategies are evolving around the world. The Towers Perrin Global Compensation Planning Report is complimentary to organizations that have provided data. 

For information about how to participate, contact your local Towers Perrin database center:

• Asia/Pacific
  Kuala Lumpur, Malaysia
  (Regional Headquarters)
  Phone: 60-3-2381-6797
  E-mail: tpapdata@towersperrin.com
  
  
• Canada
  Toronto
  Phone: 1-877-550-4402 (toll-free) from the U.S. and Canada
  1-514-982-9411 outside the U.S. and Canada
  E-mail: tpcandata@towersperrin.com
  
  
• Europe
  London, England
  Phone: 44-20-7170-2999
  E-mail: europeandatabases@towersperrin.com
  
  
• Latin America
  Ft. Lauderdale/Miami, U.S.
  (Regional Headquarters)
  Phone: 1-866-824-5815 (toll-free) from the U.S., Canada and Puerto Rico
  1-954-767-1345 outside the U.S., Canada and Puerto Rico
  E-mail: latamdata@towersperrin.com
  
  
• United States
  Valhalla, New York
  Phone:1-800-645-5771 (toll-free) from the U.S. and Canada
  1-914-745-4096 outside the U.S. and Canada
  E-mail: tpusdata@towersperrin.com