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Friday, 16 January 2009

'Freeze pay, save jobs'

MORE Singapore companies would consider freezing salaries rather than axing staff when trying to deal with the financial crisis.

The approach from firms here differs from that of other Asia Pacific nations, according to a survey conducted last year by global consulting firm Watson Wyatt.

'In terms of salary freeze and slowdown in salary increment, the percentages from Singapore companies are higher than Asia-Pacific average,' said Associate Professor Mak Yuen Teen, the firm's Asia-Pacific regional research director.

It found that 38 per cent of Singapore respondents would opt for salary freezes while the average across Asia-Pacific was just 16 per cent.

'There are also relatively fewer Singapore companies (32 per cent) that consider layoffs as a contingency plan, compared to Taiwan (44 per cent), Philippines (61 per cent) or Malaysia (50 per cent),' added Assoc Prof Mak, who presented the survey findings on Thursday.

He said employers in the Asia-Pacific as a whole are more prepared to take on contingency measures, including hiring freezes, organisational restructuring, slowing pace of salary increases, layoffs and salary freezes.

About 84 per cent of employers in Asia-Pacific have established such plans, compared with 67 per cent in the United States and 80 per cent in Europe.

'I guess Asian companies are still thinking about the '97 financial crisis,' said Assoc Prof Mak.

He also warned that the established contingency plans may have reduced employee engagement, which may lead to increased human capital risks.

These risks are related to issues like loss of key personnel, skills shortage, knowledge management and succession.

Assoc Prof Mak said that it was important to ensure cost-cutting measures were implemented fairly.

'Continuous employee engagement requires fair human resource practices and processes. Fairness and communication are a large part of what's extremely important in employee engagement,' he said.

'Employers need to explain the reasons behind major decisions such as layoffs.'

He added that rewards should be linked to performance, and that strong strategic direction and leadership from top management will be needed during difficult economic times.

'While companies may need to take immediate measures in response to the crisis, they also need to carefully manage the long-term implications of these measures,' he added.

Assoc Prof Mak will also be speaking at the one-day Careers@Singapore forum Saturday at the Singapore Marriott Hotel.

The forum is organised by accounting body CPA Australia and will examine the employment market.

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