Scenario B: How HR policies and budgets are set to change in 2014
Scenario B: How HR policies and budgets are set t...
KPMG presents the results of a survey conducted over two weeks into changes in companies’ personnel and HR policies
In a situation where the forecast growth in GDP has declined and the market is showing signs of stagnation, companies are being forced to adjust their recruitment plans and budgets for the current year to cope with the new challenges that they are facing. KPMG asked 104 leading Russian and foreign companies from various industries whether they change HR-plans or not. Please, find the main conclusions below:
- More than 60 per cent of companies analysed have either made or intend to make adjustments to their HR plans
The quickest to react to changes were small companies with a workforce of up to 500. Among these companies, only 18 percent of respondents did not change their plans. As an example of a specific industry, the majority of companies in the FMCG sector are either considering revising their HR plans or have already revised them (28 and 44 percent, respectively). In the financial sector, this year was originally planned as being a "tough" one, and many of our respondents from this sector stated that their budget for 2014 had already envisaged layoffs; hence the current situation had not led to any major adjustments to the approved plans for the year.
- The main priorities planned by companies are: increasing existing staff efficiency (89 percent), increasing employee engagement (63 percent), staff retention (61 percent), and talent management (55 percent)
In the new economic situation, most companies (79 percent) observed a need to optimise headcount. This option is increasingly being seen among companies with more than 5,000 staff; 89 percent of respondents in this category chose this answer. These companies also noted the importance of improving efficiency and employee engagement. It is logical that, compared with original plans, staff recruitment needs have fallen (16 percent); in addition, there is a trend being seen to reduce company activity in the area of establishing HR brands.
- In contrast to the 2009 crisis, companies have adopted a more balanced approach to downsizing
Many respondents stated that they plan to reduce labour costs by revising their business processes. Financial sector companies were more active than others in cutting back on recruiting new employees: at present recruitment in these companies has either been frozen (40 percent) or is only performed to replace employees who have left the company (70 percent). As an anti-crisis measure, 20 percent of companies have decided to establish common service centres. 17 percent of respondents have already decided to outsource some functions, while another 15 percent plan to do so in the event of a negative scenario development. As part of their planned changes, 37 percent of companies have already decided to reduce headcount. Of these, approximately 80 percent have decided to reduce the number of staff to a maximum of 10 percent of total headcount.
- The general trend is for a reduction in staff costs
Among respondents affected by changes in the economic situation in the country, 33 percent have already decided to index the salaries of employees at a lower percentage than was planned for 2014. In addition, 16 percent of companies plan to cancel the planned indexation of salaries. Only 16 percent of companies have no plans to make any payroll budget changes. Most respondents expect that the payroll budget will not be reduced by more than 5 percent. Under the worst-case scenario, companies are considering more severe options, with the most popular answer being from 6 to 10 percent. It should separately be noted that financial sector companies are planning to reduce their payroll budgets by greater amounts than respondents from other industries.
- 87 percent of companies affected by the changes have already revised their budget costs for HR purposes
The three areas primarily exposed to cutbacks are the same as in 2009: once again we observe reductions in recruitment (52 percent of companies), corporate events (48 percent), and external trainings (42 percent). Overall, 33 percent of companies plan to reduce their HR budgets by a maximum of 10 percent, and only 18 percent of companies plan to reduce HR budgets by 11-25 percent. However, if the economic situation worsens, then at least a third of companies surveyed stated that they would decrease their HR budgets by 11-25 percent.
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