Coronavirus Pandemic: Most firms across industries keeping salary hike budgets unchanged, says survey

New Delhi: With the unprecedented situation arising out of COVID-19 pandemic, companies across the world have re-evaluated their HR practices, and while 50 percent organisations across industries are keeping their salary hike budgets unchanged, 36 percent have opted for a decline, says a survey.

In its India’s COVID-19 HR Practices Survey Report, KPMG said around 70 percent of the organisations across levels have reported no change in the planned impact on fixed pay at the non-management and junior management levels.

In a bid to sustain these tough times, a few organisations are implementing hiring freezes and wage freezes, while others are introducing remote working alternatives, revisiting employee engagement initiatives and additional financial assistance.

The survey titled ‘Cutting through Crisis’ noted that 50 percent of the companies have deferred or suspended their promotion schedule.

Moreover, a downward trend in promotions numbers across all job levels was observed wherein 33 percent of organisations admitted to having reduced it.

However, most organisations in IT/ITES, life sciences/pharma and retail sector have refrained from any downwards trend in the overall promotion cycle, the survey noted.

However, if the COVID-19 situation persists, around 22 percent of the organisations may defer, freeze or suspend incentive payouts to support their overall finances. While 50 percent organisations across industries are keeping their salary increment budgets unchanged, around 36 percent organisations have opted for decreasing the salary increment budgets, it said.

“Organisations are navigating an unprecedented and challenging time and are collectively at a level-playing ground as none had an upper hand of being better prepared or equipped to deal with the crisis,” said Vishalli Dongrie, Partner and Head, People and Change, KPMG in India.

With most organisations now moving to a more liquid and flexible way of working, there is a need for strategies and new operating models for business continuity and workforce management, Dongrie said.

“Organisations need strategies for reimagining work and workforce landscape, new operating and governance models, evolving cultures and talent priorities, new roles and capabilities, new ways of measuring performance, and enabling areas such as transformative policy frameworks, strong technology infrastructure, employee wellbeing and an effective leadership,” Dongrie added.

On recruitment, the survey noted that 66 percent of organisations have deferred or suspended their hiring schedule at different job levels, while 30 percent have also reduced their headcount budgets.

Across job roles, except at non-management levels, most companies have opted to go ahead with freezing or suspending hiring, while, sectors such as IT/ITES, life sciences/pharma and consumer goods reported very few organisations who have a suspended hiring schedule.

The survey that polled 315 organisations across 20 key industry sectors noted that 90 percent of the responding organisations have at least one initiative around well-being of employees whereas 21 percent are quite proactive and have 5 or more initiatives to support employee well-being.