In coming weeks, a number of Fortune 500 companies are planning to cut merit raises and conduct further layoffs as they continue to wrestle with the economic downturn, according to recent polls conducted by the Corporate Executive Board.
As of mid-October, 30 percent of the 100 compensation and benefits executives polled said they were planning to reduce their 2009 merit budgets, while 45 percent weren’t sure yet, according to a poll conducted by the Corporate Executive Board, a Washington-based organization that provides best practices information and support to member companies.
“Based on conversations since that poll was conducted, it would seem that more companies have decided to reduce their merit budgets or get rid of merit raises altogether,” said Michal Kislevitz, managing director at the Corporate Executive Board. “Things are changing quickly.”
In a smaller poll of 50 executives attending a Corporate Executive Board teleconference on severance payments, more than 50 percent indicated they also were planning layoffs that they had not yet announced. Thirteen percent had already announced layoffs, while 25 percent were undecided.
“It tends to look like everyone is cutting about 10 percent of their workforce,” Kislevitz said of the respondents.
It does seem, however, that companies are being strategic about how they reduce their workforces, Kislevitz said. Seventy-four percent of companies in a poll of 45 executives said they were paying involuntary severance packages rather than voluntary ones. This may indicate that companies are making a greater effort to weed out low performers rather than just offer buyouts and see who takes them, Kislevitz said.
“I think what’s going on is that these organizations are being more thoughtful about who they are cutting,” Kislevitz said.
