Pay freezes hit HK companies

Special Report:Global Financial Crisis

HONG KONG, March 17 (Chinese media) -- The trend of having pay freeze and flexible

incentive schemes was spreading among local companies, said the Hong Kong

Institute of Human Resource Management (HKIHRM) when making its survey results

public on Tuesday.

In its January 2009 Pay Trend Survey, the HKIHRM surveyed 125 prominent

Hong Kong companies from 17 business sectors.

Of the 45 companies that confirmed their pay adjustments during the January

survey period, 68.9 percent of them were making an overall zero pay adjustment,

hitting a record high since 2002.

The data revealed that companies are now more prudent in making pay

adjustments, and that the pay freeze is the prevailing cost- control option.

However, no pay cut has been recorded for six consecutive years.

"Given a rather gloomy economic outlook, we believe the downward trend will

continue. Base pay increases will now be offered on a more selective basis" said

Lai Kam-tong, Co-chairman of the Remuneration Committee of HKIHRM.

With respect to the bonus payment, most of the 45 companies running a

guaranteed-bonus policy awarded their employees with the average bonus size

being one month's base pay. A few of them would shift to a non-guaranteed-bonus

system.

As for the 33 companies with a non-guaranteed bonus scheme, 93.2 percent of

their eligible employees were awarded the bonus, with the average bonus size

being 1.08 months of pay. This compared with the 95 percent of eligible

employees actually awarded a bonus of 1.42 months of pay in the same period last

year.

The HKIHRM said that changes in incentive systems could be frustrating for

employees especially during tough economic periods, therefore, companies were

suggested to have open communication with their staff and to put in place an

effective benefit strategy and bonus plan.

"Communication with employees is the key to ensure employees' buy-in for

any corporate changes and will help them understand the current performance of

the business. It will also help engage them in making contributions towards cost

control and enhancing productivity," said Lai.