2010 Salaries: More Cautious Increases and More Variable Pay
22 January 2010
Read by 5794 persons
Salary changes are expected to be around 5%. HR managers believe a trend will emerge in the first quarter. Starting salaries have returned to reasonable levels.
After a rather austere year for salaries in 2009, what does 2010 look like? According to salary specialists, caution and wait-and-see will be the order of the day. It will be necessary to wait until the first quarter for more visibility. Houcine Berbou, senior consultant at LMS ORH, expects a projected increase rate of between 4 and 5% depending on the sector. For her part, Ghizlaine Laabi, head of the salary survey at Diorh, adds that "the salary increases planned for 2010 are practically identical to those initially planned for 2009". Thus, the Diorh firm's economic survey, conducted with a panel of 85 local companies and subsidiaries of multinationals in June 2009, shows that the median rate of projected increases in 2010, across all sectors, would be 5% for all professional categories (directors, management committee, senior managers, managers and supervisors, sales force, employees and workers).
The head of the survey also adds that "increases will be maintained for a majority of companies". But some have already informed their employees that there will be no improvement in this regard. For example, Royal Air Maroc has clearly announced its decision to freeze salaries but also to eliminate individual salary increases. In addition, no particular increases or benefits in kind accompanied the functional promotions resulting from the reorganization.
And all acquisitions of company or service vehicles are suspended until further notice, since October 1, 2009. Remember that last year, companies had announced an increase rate of 6% for the category of managers and executives. Because of the crisis, they reduced the rate to 5% and, finally, at the realization level, they lowered it by an additional point, to 4 or 4.5%, depending on the sectors.
Variable pay will be increasingly decisive
The crisis has enabled many companies to start thinking about the balance of the salary bill. According to Mr. Berbou, "among the actions to be taken, three are essential to succeed in maintaining the motivation and performance of teams: to further enhance all the elements of the remuneration package, regardless of the fixed and variable salary; to strengthen managerial support on the ground to answer the questions or uncertainties of employees; to be able to, despite limited budgets, distinguish the most high-performing employees". The emphasis will also be on the variable part of the salary. "Rather than thinking about implementing systematic increases, I think it will be important to link salary increases to the individual and collective performance of the person," comments Fouad Najeddine, HR director of Centrelec. Much more than in normal times, variable compensation during the crisis has been a significant adjustment factor. The current difficult context and the resulting performance obligations are an opportunity to reposition this variable compensation as a recognition of significant results and high performance.
"Companies that have implemented variable compensation systems in the order of 20 to 40% of the base salary are doing much better in times of crisis, because the variable part which serves as a buffer allows them to avoid reaching the stage of workforce reduction," adds Mr. Berbou. Thus, variable compensation allows for the redefinition of objectives and performance measures consistent with economic challenges and with attitudes that will lead to success. Another significant reason to prioritize the variable component is to ensure the company's competitiveness and retain the best talent without recurring costs. Another positive point of the crisis for companies: starting salaries will be kept at reasonable levels. The phenomenon of salary inflation observed on the job market three years ago is well behind us. The increased demand for skills had exhausted supply in a relatively short time, to the point of worrying HR managers about the situation, and some were seriously angry with companies that were driving up the bidding.
A normalization of starting salaries
According to Ahmed El Meslouti, HR director of Polydesign, a company specializing in the automotive sector, "the starting salary for a technician can currently range from 4,000 to 9,000 net DH depending on experience and qualifications". The same applies to Mr. Najeddine. According to him, starting salaries in the electrotechnical sector are between 8,000 and 9,000 net DH for sales representatives (without experience) and from 4,000 net DH for specialized technicians (DUT type). But despite the economic difficulties, the big names will continue to be pampered. Houcine Berbou recalls that the salaries of graduates from major foreign schools remain significantly above average.
Already in 2009, they ranged from 248,000 gross annual DH for candidates from major foreign business schools to 290,000 gross annual DH for candidates from major engineering schools. The Diorh survey shows that nearly 50% of the companies in the panel plan to recruit in 2010, compared to 43% who plan to freeze their recruitment, while 7% plan to reduce their workforce. By sector of activity, the durable goods industry, high-tech and banking/finance are the most concerned with strengthening their workforce.
Brahim Habriche
Published January 18, 2010
Posted online January 22, 2010
lavieeco.com
After a rather austere year for salaries in 2009, what does 2010 look like? According to salary specialists, caution and wait-and-see will be the order of the day. It will be necessary to wait until the first quarter for more visibility. Houcine Berbou, senior consultant at LMS ORH, expects a projected increase rate of between 4 and 5% depending on the sector. For her part, Ghizlaine Laabi, head of the salary survey at Diorh, adds that "the salary increases planned for 2010 are practically identical to those initially planned for 2009". Thus, the Diorh firm's economic survey, conducted with a panel of 85 local companies and subsidiaries of multinationals in June 2009, shows that the median rate of projected increases in 2010, across all sectors, would be 5% for all professional categories (directors, management committee, senior managers, managers and supervisors, sales force, employees and workers).
The head of the survey also adds that "increases will be maintained for a majority of companies". But some have already informed their employees that there will be no improvement in this regard. For example, Royal Air Maroc has clearly announced its decision to freeze salaries but also to eliminate individual salary increases. In addition, no particular increases or benefits in kind accompanied the functional promotions resulting from the reorganization.
And all acquisitions of company or service vehicles are suspended until further notice, since October 1, 2009. Remember that last year, companies had announced an increase rate of 6% for the category of managers and executives. Because of the crisis, they reduced the rate to 5% and, finally, at the realization level, they lowered it by an additional point, to 4 or 4.5%, depending on the sectors.
Variable pay will be increasingly decisive
The crisis has enabled many companies to start thinking about the balance of the salary bill. According to Mr. Berbou, "among the actions to be taken, three are essential to succeed in maintaining the motivation and performance of teams: to further enhance all the elements of the remuneration package, regardless of the fixed and variable salary; to strengthen managerial support on the ground to answer the questions or uncertainties of employees; to be able to, despite limited budgets, distinguish the most high-performing employees". The emphasis will also be on the variable part of the salary. "Rather than thinking about implementing systematic increases, I think it will be important to link salary increases to the individual and collective performance of the person," comments Fouad Najeddine, HR director of Centrelec. Much more than in normal times, variable compensation during the crisis has been a significant adjustment factor. The current difficult context and the resulting performance obligations are an opportunity to reposition this variable compensation as a recognition of significant results and high performance.
"Companies that have implemented variable compensation systems in the order of 20 to 40% of the base salary are doing much better in times of crisis, because the variable part which serves as a buffer allows them to avoid reaching the stage of workforce reduction," adds Mr. Berbou. Thus, variable compensation allows for the redefinition of objectives and performance measures consistent with economic challenges and with attitudes that will lead to success. Another significant reason to prioritize the variable component is to ensure the company's competitiveness and retain the best talent without recurring costs. Another positive point of the crisis for companies: starting salaries will be kept at reasonable levels. The phenomenon of salary inflation observed on the job market three years ago is well behind us. The increased demand for skills had exhausted supply in a relatively short time, to the point of worrying HR managers about the situation, and some were seriously angry with companies that were driving up the bidding.
A normalization of starting salaries
According to Ahmed El Meslouti, HR director of Polydesign, a company specializing in the automotive sector, "the starting salary for a technician can currently range from 4,000 to 9,000 net DH depending on experience and qualifications". The same applies to Mr. Najeddine. According to him, starting salaries in the electrotechnical sector are between 8,000 and 9,000 net DH for sales representatives (without experience) and from 4,000 net DH for specialized technicians (DUT type). But despite the economic difficulties, the big names will continue to be pampered. Houcine Berbou recalls that the salaries of graduates from major foreign schools remain significantly above average.
Already in 2009, they ranged from 248,000 gross annual DH for candidates from major foreign business schools to 290,000 gross annual DH for candidates from major engineering schools. The Diorh survey shows that nearly 50% of the companies in the panel plan to recruit in 2010, compared to 43% who plan to freeze their recruitment, while 7% plan to reduce their workforce. By sector of activity, the durable goods industry, high-tech and banking/finance are the most concerned with strengthening their workforce.
Brahim Habriche
Published January 18, 2010
Posted online January 22, 2010
lavieeco.com
