US sub-prime crisis makes India Inc review HR policies
The combined pressure of global economic slowdown, the sub-prime crisis in the US and rising inflation is forcing India Inc to have a relook at their HR policies, increase productivity and redeploy their manpower. Though, companies have factored in the economic turmoil in their budgets for 2009, the average salary projections for the coming year are lower by only a percentage point at 13.9%. Despite the increased pressure, the year 2008 saw a strong salary increase of 14.8% according to a study by HR consultancy firm, Hewitt Associates.
According to the survey across 150 companies, only 20% are resorting to a slowdown in hiring or a complete freeze. While the majority, 57% are looking to balance the effect of inflation and lower HR budgets by increasing productivity, 31% are deploying their manpower towards better efficiency. Many companies (30%) have also introduced performance linked pays to deal with fixed pay increases.
As far as shaving off operating costs is concerned, travel and recreation seems to have received the maximum cuts. While only 9% of the companies are looking at reducing their training budgets, a good 25% are in favour of reducing staff budgets, largely in areas of travel and recreation.
“Contrary to expectations, there hasn’t been any dramatic move to downbeat macro-economic factors on compensation. Instead, companies are looking at innovative ways to cut costs like travel and recreation without compromising on employee salaries or learning and development,” said Sandeep Chaudhary, leader, Hewitt Rewards Consulting Practice India. There is a chunk of companies, however very small, that is also looking at increasing the work hours to manage rising costs of business. “In our burgeoning economy there is a colossal waste of resources, from capcital to talent deployment. Organisations would need to take stock and enumerate various ways to improve efficiency and boost productivity,” said Chaudhary.
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