Taking the tough decisions for 2010

The business cycle never stops and many managers' thoughts will be turning to 2010, trying to assess how their businesses will perform, what pay structures will be in place and how these might compare to their peers. This will be tricky because forecasting a month ahead at the moment is a challenge in itself.

Government workers are next in the firing line while employees already affected in 2009 could be facing another round of pay freezes in 2010, though this might result in further talent either moving within or from the industry as it seeks better pay.

Corin Taylor, senior policy adviser at the Institute of Directors, said: "It will depend on where the individual business is. If you are an employee choosing between a job or a pay freeze, the latter might be the best option. Bonuses could also be cut but it is a big challenge [for managers] and skilled staff could be looking elsewhere."

Taylor emphasised that plans for pay will have to be made now for 2010 and that there will be little scope for change once they are made, although quarterly bonuses could be one flexible option. He added: "Firms have accounting plans for single years, so pay costs need to be fixed before the start of it. A greater emphasis on performance could be key for the future and the next few months is the time to address this."

Challenges

Broker managers are under pressure just as much as their business clients and, although generally resilient, caution is key. Stuart Reid, chief executive at Bluefin, commented: "We constantly review our forecasts and business plans to make tough decisions, which are often in line with the market and nothing outside the norm. We will continue to keep costs down in what is the most difficult environment I've ever experienced." Reid, in charge of several large, acquired firms, continued: "Our challenge is trying to harmonise what we have and keeping costs down. We have to keep hold of the staff that are valuable." He conceded that some of the group's branches will merge where it makes sense.

Opportunities

Others see the downturn as positive for employer-employee relations. Ruth Spellman, chief executive at the Chartered Management Institute, said: "Although it has been undoubtedly a tough year, perhaps one positive consequence of the recession is the newfound flexibility and enhanced co-operation between employers and employees. The increase in flexible working measures that are being introduced, such as unpaid leave or shorter working weeks is one way in which employers are trying to avoid mass redundancies."

Some would say much of this has been implemented from the top down, with take-up of voluntary propositions being rare. Spellman continued: "These measures are viable across all types of industries and we have witnessed businesses including British Airways and KPMG introduce them in order to retain talent; this is a reassuring sign that lessons have been learnt from previous recessions. There is increased awareness that future competitiveness will depend upon retaining skilled individuals and, where possible, continuing to train in preparation for recovery."

Senior managers are also playing their part, with 50% of the IoD's members choosing to freeze their pay this year and another 40% taking a cut in bonuses. As 2010 nears, the planning process for staff pay will climb higher up business agendas. Meanwhile, the number of key staff moving jobs - and from which companies - will be interesting to watch to assess how effective each broker's strategy has been.