With corporate profits up in many industries, human resources experts say many employees are approaching 2011 with expectations for a significant pay increase ”“ or else.
Coming off a year in which corporate profits skyrocketed even as payrolls were held in check, companies could see an exodus of talent when companies begin hiring again, says Challenger, Gray & Christmas, an executive recruitment company based in Chicago. Turnover may be particularly high among employees who “settled” for their current position during the downturn, Challenger, Gray & Christmas added, citing data from the U.S. Bureau of Labor Statistics showing that half of private-sector separations in September were voluntary departures ”“ people quitting the job.
“In 2009, you nodded your head vigorously when you would hear, ”˜Well, things could be worse ”“ you could be unemployed,”™” said David Lewis, CEO of OperationsInc, a human resources consulting company in Stamford. “In 2010, it”™s getting old.”
If smaller companies have been provided with one of their periodic opportunities to snag sophisticated managers from larger companies who lost their jobs in the downturn, at the same time they may have to guard against their own employees eying the other side of the fence.
“Because of the recession, there is an opportunity to get talent,” said Kathleen Lundquist, CEO of APT Inc., a human resources advisory company in Darien. “We”™re seeing preparation for hiring. We are seeing people thinking, ”˜I am going to come out of this, where am I going to be positioned in terms of talent?”™”
Compensation in the finance industry is rebounding after two difficult years, according to a study by Stamford-based Greenwich Associates and Johnson Associates of New York City.
After average compensation for hedge fund managers dropped by between 40 percent and 45 percent in 2008, and has yet to fully rebound compared to what their counterparts at traditional asset management companies are seeing.
Hedge fund equity professionals in 2010 are earning about half of what they took home in the boom days of 2007 ”“ and less than their counterparts at traditional asset management organizations, according to Jennifer Litwin, director of institutional marketing for Greenwich Associates.
Greenwich Associates and Johnson Associates project a significant expansion in the use of deferred or long-term incentives by finance companies, possibly at the expense of bonuses that provide immediate rewards for profits ”“ and which can encourage employees to take the money and run to the next highest bidder.
“In financial services at the end of the day, money is king,” Lundquist said. “But people have other needs, and if the organization meets those other needs, their sense of affiliation with the organization can increase.”
At the other end of the spectrum, Main Street businesses have been holding the line on compensation according to the National Federation of Independent Business, which reported that small businesses on average plan to increase compensation at most 5 percent on average next year.
“If this market heats up, there is going to be a lot of people creating turnover,” Lewis said. “You can”™t go out there and say, ”˜We”™ve had a great year, here”™s a 2 percent increase.”™ There are some employees who are going to say, ”˜Hey, I”™ve gone through hell here, I”™m working five more hours a week ”“ how about a little something, here?”™”
