Recruitment, employee policies and compensation are the top three areas of focus as per PricewaterhouseCoopers

Bangalore, April 30th, 2009: The report ‘Managing the effects of the Downturn – Rethinking your approach to People’ was released by PricewaterhouseCoopers (PwC) today. It reveals how Indian employers are dealing with, or plan to deal with people issues during this downturn. The report is based on an online dipstick survey of over100 respondents from over 12 sectors across industries

As per the report, the top three areas of focus that are being addressed by most companies during this downturn are recruitment, employee policies and compensation. While larger companies are modifying their hiring plans to align them with revised growth estimates, the smaller employers are focusing on talent and performance management. In fact, some employers are on the look-out for good talent that can now be acquired at an affordable cost. The report however confirms that most companies have frozen or deferred hiring and are adopting a “wait and watch” policy.

In the area of policies and practices, companies have imposed curbs on travel, allowances and benefits. Some are also outsourcing people related administrative processes such as payroll, attendance management and management of retirement benefits. As regards compensation, bonuses are being pared down, fixed pay increases are being moderated if not frozen, and benefits and allowances are being reviewed at least at executive level.

Sankar Ramamurthy, India leader – People and Change practice of PricewaterhouseCoopers, commented:

“Most companies in India are gearing up for tough times but are avoiding knee-jerk reactions. Employers are uncertain about the extent, duration and depth of the economic slowdown and the timing of a recovery. Therefore, they are being cautious about spending and making investments, and this caution is reflected in the way they plan to manage human resources.”

According to the report, most companies are shying away from employee layoff as a way of controlling costs, with 84% of the respondents voting against it. In part, this reflects cultural factors at work and the reputation loss that employers fear they may have to deal with as a result of large-scale layoffs. A significant majority of respondents said they planned to re-deploy their workforce to activities and businesses that were relatively better off and that they were proposing to re-skill their workforce to make this possible.

Sankar Ramamurthy concluded:

“Operational efficiencies and process improvement did not get sufficient attention in the past as CEOs and HR professional’s main concern was finding and keeping talent. With a shift in employee behavior, this is probably a good time to focus on redefining the role, effectiveness and efficiency of the HR function. Similarly differentiation in performance and rewards suffered at the altar of retention. But the current environment provides the necessary impetus to employers to drive performance management and differentiation.”

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Notes to Editor:

SURVEY HIGHLIGHTS

The top three focus areas of HR interventions undertaken by companies during the downturn are:

1. 76% of participants are reviewing their recruitment strategy to manage their costs. IT/ITES sector known for aggressive hiring has presently become more conservative with 84% stating they have put a freeze on recruitment. Other sectors that have put a freeze are FMCG (70%), Manufacturing (63%), BFSI (57%). Smaller firms with employee strength of less than 100 are focusing on selective hiring for critical positions only. Another interesting finding is that 84% respondents shy away from employee layoffs as a way of controlling costs.

2. 70% of the respondents have revised employee policies and practices. 80% of FMCG and 70% IT/ITES companies have revised their travel policy. Other revisions are being made in the areas of employee perks, allowances and benefits. Employees are being encouraged to travel economy class and use facilities such as guest houses and also make use of public transportation

3. 69% respondents revealed that they are making changes to compensation policy with 35% freezing increments for the coming year and reducing bonus/ variable pay. 92% consulting companies are not considering pay cuts for employees however 50% of the FMCG companies are looking at freezing increments.

About PricewaterhouseCoopers

PricewaterhouseCoopers Pvt. Ltd. (www.pwc.com/India) provides industry – focused tax and advisory services to build public trust and enhance value for its clients and their stakeholders. PwC professionals work collaboratively using connected thinking to develop fresh perspectives and practical advice. Complementing our depth of industry expertise and breadth of skills is our sound knowledge of the local business environment in India. PricewaterhouseCoopers is committed to working with our clients to deliver the solutions that help them take on the challenges of the ever-changing business environment.

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About People & Change practice

The People and Change Practice at PricewaterhouseCoopers helps employers achieve lasting change and success through their PEOPLE. The practice draws on its multi-domain, multi-research capabilities to offer a wide range of integrated people solutions that help sustain and build stakeholder value and improve overall performance.

The practice helps clients meet business objectives of:

§ Maximising the impact of talent

§ Creating sustainable people Operations

§ Achieving a Market driven organizational Structure

§ Making change Stick

Getting the best from people when there is constant change is the key to sustainable competitive advantage. Sound strategies, processes and technology alone does not deliver results. Its takes people to accept, adopt, drive and sustain the change to realize tangible impact.