U.S. Multinationals Reconsider Salary Increase Budgets

However, those organizations that have decided to revise their spending levels have significantly reduced their budgets, resulting in an average decrease of 17% in overall increase budgets. Eighty-one percent of organizations that are implementing changes said they are doing so due to concerns about the broader economy, while 60% said their organization is undergoing cost reductions.

Forty-four percent of organizations changing their increase or variable pay budgets indicated they will do so globally, rather than by country (42%) or by region (15%).

Of organizations who responded when asked about economic impact on variable pay programs, 52% said their variable pay programs will not be impacted. Thirty-eight percent reported an impact on their broad-based variable payouts globally, and 10% reported an impact on specific countries only.

Among those who said variable payouts would be affected, 100% said 2008 payouts would be reduced by more than 10%, and 71% predicted 2009 payouts would be.

The Hewitt study found the economic impact on global operations has been varied and organizations are using a variety of methods to reduce costs. The most common approaches have been to enforce a hiring freeze (20% globally, 40% by country), reduce promotions (21% globally, 12% by country), and lengthen the time between overall increases (18% globally, 23% by country).

The survey “Impact of Global Economic Conditions on 2008/2009 Non-U.S. Compensation Spending” received responses from 97 U.S. multinational organizations, 67 manufacturing companies and 30 service companies.