Cost-cutting European firms face risks

Fri, 3 Jul 2009

European firms, focused on cutting costs through layoffs, salary and hiring freezes, face problems in the medium term, according to research from consultants Watson Wyatt.
 
Its survey of 200 firms from across Europe and the Middle East found that 43% (52% of UK companies) cut permanent workers and pay, with over 70% looking to reduce their budgeted pay increases in response to the current economic climate.
 
Carole Hathaway, European head of strategic reward consulting at Watson Wyatt, says: “Despite a majority of companies claiming to have a greater focus on their key talent, few are supporting this by actually targeting their reward spend on them.

“Top performers are not necessarily the same as those with business-critical skills. Few companies appear to have the reward and performance programmes that enable them to make this important distinction. But failure to reward adequately those with business critical skills – as well as high performers – can have implications on retaining these key workers when the economy recovers.”