HR Departments Feeling Economic Impact

July 6, 2009 – Over 78 percent of human resource departments have been impacted by the current economic climate, with 53 percent implementing wage freezes and 52 percent undergoing layoffs during the past year, according to Salary.com’s most recent economic impact survey of over 400 clients. Early indications suggest that approved merit increases for 2009 will be approximately 1.5 percent to two percent, down from 2009 projections of 3.6 percent to 3.9 percent. “Economic uncertainty may persuade organizations to hold off on any performance rewards, but this can be de-motivating,” said Brent Kleiman, senior vice president of marketing and strategy at Salary.com. “Top employees will always be in demand, so it is prudent to allocate some budget toward rewarding high performance. It may be a tough sell to management, but the cost of losing superstars far exceeds that of an incremental increase during performance reviews.” As a sign that companies are recognizing this, more than 50 percent of survey respondents indicated that top performers will still be eligible for bonuses, regardless of implemented pay freezes.