Impact of Salary Cuts Survey Report

By: Memory Nguwi | Posted On: 2017-04-11 15:00:00 | Updated On: 2021-12-03 14:03:04 | Views: 182




This research is aimed at establishing common practices that organisations are taking when cutting salaries and what the legal implications and challenges are which are associated with salary cuts. The findings presented in this report are meant to assist organisations that want to implement salary cuts to make their organisations more sustainable. Although there are best practices when it comes to implementing salary cuts, at the end of the day, each organisation is uniquely set up. As such, it is worth emphasising that great care should be taken when adopting the recommendations of this report. Key Findings Twenty four (24%) percent of the participants cut salaries.

 

 


articles in content ad
Latest Salary Survey Reports

Latest salary survey reports

Start Using Up-to-Date Relevant Data to Make Better HR Decisions


All participants that cut salaries in the last three years also reduced their staff either by retrenchment or non-renewal of contracts. The majority of participants implemented a salary cut on basic salaries. Generally speaking, the salary cut methodology involved negotiations with affected employees’ representatives e.g. NEC, Works Council and Individual Employees. The salary cuts for non-managerial employees were generally lower than those of managerial and executive employees. Salary cuts for non-managerial employees ranged from zero percent to twelve percent. Salary cuts for managerial and executive level employees ranged from five percent to twenty percent. Most participants faced challenges at the non-managerial level of employment when implementing salary cuts. These challenges included the following: Trying to negotiate down statutory salaries as pegged by the NEC; There was no consensus between employers association and Trade Unions; There was resistance from CBA graded employees which resulted in no salary cuts for CBA levels; There was no consensus between managerial and non-managerial employees; Demotivation, low productivity, and reduced employee morale.

 

When asked if the salary cut was a success, there was a general consensus that the salary cut was a success. It saved the participating organisations significant amounts of money although some participants highlighted that there was demotivation among employees. Methodology Our survey targeted companies operating in Zimbabwe. We designed a questionnaire and emailed it to Human Resources Managers and other Senior Managers via Survey Monkey (an online survey software) for completion. Twenty five companies (25) responded. The table and diagrams below describe the profile of companies whose data was analysed in this survey.

 

Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

Memory Nguwi
      View Memory Nguwi's full profile



Related Articles


  • Maintaining your organisation pay structure

    Organisations develop and implement salary structures to provide a framework for administering their employee compensation programs. Effective administration of a compensation program requires a balance between the pay levels for employees inside the company (internal ...

    Views: 119

    By Carl Tapi

    Share article with colleagues:          
  • What you Need to Know about Performance-Based Pay

    Performance-related pay is a system that employers use to pay their employees depending on their productivity at the place of work. These systems vary depending on the type of industry, the number of employees, and ...

    Views: 299

    By Carl Tapi

    Share article with colleagues:          
  • Things You Need to Know About Incentives

    Employee morale is vital for a company to succeed and adapt to changing consumer needs. Numerous studies indicate that low morale impacts an individual’s productivity, but what causes low morale? HR leaders and company ...

    Views: 467

    By Tinotenda Sibanda

    Share article with colleagues:          
  • Salary Benchmarking

    Use salary benchmarking data to make better decisions on compensation Most businesses don't know where to start assessing competitive wages because they don't have the information and resources to gain insight into market rates. In ...

    Views: 171

    By Milton Jack

    Share article with colleagues:          
  • Employee mileage reimbursement practices: All you need to know

    It is common for employees to use their personal vehicles on company business from time to time. However, such journeys may incur costs, and employees would require that the company reimburse them for the expenses ...

    Views: 2087

    By Nyasha Mukechi

    Share article with colleagues: