As the United Kingdom slowly begins the process of re-opening businesses, workers continue to see pay and benefit cuts plus layoffs and furloughs, and many businesses are not sure how long it will last. That is according to a new Korn Ferry survey of corporate rewards and benefit leaders.
In the late-May 2020 survey, more than a third (34 percent) of respondents said their companies have implemented salary cuts or are considering them, 53 percent have implemented salary freezes or plan to, and 40 percent say they have, or are considering, deferring salary increases.
Almost a third of companies cutting wages say the cuts will last three to four months, and almost a third of the survey respondents also said that cuts will last for 5 t0 6 months.
In addition, over half (57 percent) have implemented or are planning temporary furloughs leveraging government subsidies. While 33 percent say the furloughs are expected to last two to three months, 37 percent say they do not know how long the furloughs will last.
More than a third (48 percent) have either implemented or are considering permanent layoffs, affecting 16 percent of their workforces on average.
Other statistics from the survey:
- 22 percent are offering voluntary unpaid leave
- 68 percent are delaying new hires
- 37 percent are reducing overtime
- 15 percent have implemented or are considering early retirement programs
“Since we first conducted our first survey in this series in March, we’ve seen a continued increase in the percentage of companies implementing reductions in pay, benefits and staff,” said Korn Ferry Global Benefits and Reward Leader Don Lowman. “With the uncertain path this pandemic is taking, it’s critical that organizational leaders monitor the situation regularly and adjust plans to meet the evolving situation, while still keeping an eye to longer-term recovery.”
When asked what they will do differently post-crisis, 94 percent said employees will continue to work more virtually. More than half (60 percent) say they will be more disciplined about cost management, and 50 percent say they will be more focused on transparency with employees.
The majority of organizations (75 percent) expect changes to their total rewards programs during the next six months to two years, with 41 percent expecting significant changes.
“It will take time to adapt to a new way of doing business, but company leaders must remember that to attract and continue to engage the best talent, they will not only need to have a competitive rewards and benefit program, but a program that is valued by employees and is cost effective,” said Lowman.