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WE recently published our National Salary Survey Report for the first half of 2015. Fifty one participants drawn from across 14 sectors of the economy participated in this survey.

In total, participants provided data for 5 822 employees. These employees represented to full organisation spectrum that is non-managerial employees, to managerial employees and Executives. The survey was based on data that we collected between February and April 2015.

The movement in basic salaries is not consistent. Some organisations have not increased basic salaries at all. In other cases we observed that basic salaries were actually coming down. As a result salary increases ranged -0,14 percent to nine percent. There were a number of cases last year where companies re-negotiated contracts with their employees in a bid to manage the wage bill.

The sectors of the economy that are pay higher salaries are generally the more productive sectors. For example, mining and telecoms.

While organisations are struggling to meet salary obligations as demanded by employees, very few organisations have implemented sustainable remuneration systems. Many organisations are still on the traditional remuneration system which has the basic salary and many other additional remuneration items. Only three of our 51 survey participants are on the total cost to company model.

We however, observed that some employers are reducing the number of benefits that they provide to their staff especially managerial staff. For example, some companies have stopped providing the school fees benefit. Other companies are moving are also moving away from providing fully maintained company cars to providing vehicle allowances where the employees assumes ownership of the vehicle and uses the allowance to maintain it.

While it is generally acceptable to increase salaries as the performance of the business increases, as many companies are realising now, this is being very short-sighted. There are many companies that pegged salaries too high thinking the “level of business” would always be the same — overtime that assumption proved false. Best practice is to maintain a lean basic salary and benefits structure and add an incentive component that is linked to performance. This incentive component can fall away should the performance of the incumbent deteriorate.

Very few organisations have variable pay systems that can allow them some form of flexibility with regards to their total wage bill. Only eight of the 52 participants said they provided some form of performance-related bonus, 21 of the participants said the bonus was guaranteed — regardless of individual or company performance.

Generally lower level salary adjustments have been driven by National Employment Council (NEC) negotiations although some of the organisations indicated that they could not afford increases given at NEC level. This has resulted in some seeking exemptions. A number of NECs are still actually deadlocked.

Despite all the evidence showing that the economy is in distress, some of the trade unions and the generality of the workers are ignoring this by calling for poverty datum line linked wages. A case study of how not to adjust salaries is evident in the civil service. Across all sectors we still find unions that are still demanding huge increases far above the current inflation and productivity levels.

We have also noted increased levels of retrenchments across all industries as organisations battle to contain staff costs in the face of declining capacity utilisation and productivity levels. The current salary trends reflect the low levels of productivity and generally a struggling economy. The economy is not yet at a stage where it can absorb huge salary increases that are not backed by productivity gains. Unions and employers must forge partnerships that will help preserve jobs rather than being short-sighted. A high wage economy is a barrier to new investment and competitiveness.

Indications so far from some of the survey participants and those not part of this survey show that they will be budgeting salary increases of between zero percent and seven percent. The organisations targeting a higher percentage increase are assuming that their productivity will pick up in 2015.

To receive the full Private Sector Salary Survey Report April 2015, contact me on the details below.

Memory Nguwi is the managing consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-4848195029002762900966 or cell number 077 2356 361 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

Source : Financial Gazette