There are lots of comments and articles around at the moment about what may or may not happen to pay rises over the forthcoming period of possibly-getting-even-worse recession. Several of them consider the topic of how to retain staff/key staff/best-performing staff in the event of a pay freeze or, possibly, pay reduction. My suspicion is that, for the most part, the problem will not arise until the economy starts to recover. So no need to panic yet.
Why? Well three reasons. Firstly, there will not be as many opportunities out there for them to move to. Secondly, moving is much riskier in the current climate. Assessing the risks at a potential employer is much harder than for your current one and if you do think your current one at risk do you want to miss out on the redundancy cheque by leaving. Finally, the competitive imperative to keep up by jumping ship will reduce as everyone else bunkers down. I am old enough to have been working in front-line personnel (note to younger readers: that’s what we called HR in those days) during the Wilson-Callaghan years of incomes polices and £6 per week maximum rises. Then too the doom-mongers predicted a surge in staff turnover. It did not materialise and, in spite of raging inflation, turnover seemed to reduce. My personal theory for this was that the government-imposed rises removed any feelings of inadequacy when your neighbour won a bigger rise than you. They mostly did not and people could just stay in their comfort zone without feeling inadequate.
Posted by Frank Hobson 