Firms face struggle to keep hold of top talent

Management are walking a precarious tightrope this summer as the appraisal
season kicks off and firms’ top talent weigh up their career options ahead of
the possibility that they may not be earning a pay rise or bonus this year.

Many staff at firms are becoming increasingly anxious ahead of the appraisal
season for fear that they won’t receive what they consider a well-earned pay
rise and bonus, while others have already spent their anticipated rewards.

The anxiety stems from the fact that some firms’ HR teams have been sending
out warning signals early on indicating that staff should not take it for
granted that this year they will receive the usual pay rise or bonus because of
the economic downturn.

But employees are angered because they say they have maintained the same
standards of quality in their work and therefore ought to be rewarded. Some are
threatening to leave if they don’t receive a pay rise.

‘I’m working harder than ever before and it would be nice if that could be
recognised in some small way. I’m constantly praised for my standard of work,
but words don’t pay the bills.

‘If I don’t get a pay rise I will definitely think twice about staying. I
think there are some people who deserve a rise and others who don’t and I think
whoever makes the decision needs to take a long, hard look at who they really
want to keep. Obviously at the moment the job market is difficult, but I’d
certainly explore the options,’ says one accountant at a top 20 firm, who wishes
to remain anonymous.

The strength of firms’ people could also prove to be their weakness if this
year’s appraisals are not well managed. People are attracted to the industry in
the first place because they are highly intelligent, motivated and ambitious
career people. Although many understand the economic constrains placed on firms
at present, it’s unlikely they will be happy to continue to work hard without
reward, while many will look for alternative options.

Ingrid Waterfield, UK head of reward at KPMG, says: ‘Wherever possible, we
aim to pay a bonus where the business delivers results. But we have said that we
envisage reduced bonuses this year due to the recession.’

Grant Thornton says there will be ‘minimum movement upwards’ this year in
terms of pay rises, but have communicated this early to staff. It’s unlikely
there will be much in regards to bonus payments either, but it has promised to
review the situation.

Mick Holbrook, director of organisation and people development at
PricewaterhouseCoopers, says that until the board knows the actual performance
of the business, which would be mid-June, no firm decision had been made. He
adds: ‘We have said that we would anticipate there wouldn’t be widespread large
rises in salary or bonuses this year.’ Holbrook adds that this has been clearly
communicated throughout the firm since the beginning of the year.

Even though some staff aren’t expecting pay rises they do not accept the
situation unconditionally. ‘I’m not really expecting a pay rise. It will be
great if I get something, but I’m not holding my breath. I’d be happy knowing
that no one is getting a pay rise if it means a guarantee of no redundancies,’
says another accountant at a top 20 firm.

Some firms may chose to promote deserving staff without monetary reward, or
even a deferred pay rise, but whether such a move will satiate the most
ambitious among employees is uncertain.

While the job market is tough at present there are options for the best
employees. Firms are continuing to grow certain aspects of their businesses,
such as forensic and restructuring, while also preparing other teams for the
upturn. Poaching disgruntled staff has not died away and employees know this.

Lucy Davison, associate director at recruiters FSS, says: ‘In our experience
employees are taking a longer-term view and focusing on keeping their jobs and
making career development their number one priority.

‘Having said that, it is important for employers to focus on retention and
invest in their best people if they are to keep them once the upturn happens.
Having the right talent in place will be crucial if firms are to take full
advantage of the recovery and that means really focusing on key employees who
add real value and ensuring they are rewarded. Failing to focus on retention
techniques now may have dire consequences for staff attrition later on.’

Stevan Rolls, head of HR at Deloitte, says he couldn’t comment on staff pay
or bonuses, but that circumstances were ‘exceptional and everyone understands

‘We are encouraging managers to be honest and realistic and stay close to
their people. People are worried no matter how much reassurance we give,’ he

Times are indeed tough, but management shouldn’t take advantage of the
situation to avoid rewarding those who deserve it. If it is a case of rewarding
partners, but not the bulk of staff, then that sends all the wrong signals and
could cause unnecessary divisions when management and staff need to be pulling
in the same direction.

That said, staff need to be realistic in their salary expectations in these
exceptional times. Perception is of equal importance. We only have to look to
what’s happening in parliament to understand how much perception matters
irrespective of the rules.

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