No Prizes for Runners-up

With pay budgets in trouble, companies need new ways to motivate key staff

Fewer American workers will get pay rises in the next few months than at any time for the past 30 years. Instead, at one company in 20, wages have been declining, and at three-quarters pay is flat, according to a recent survey by the National Association for Business Economics (NABE). Companies are therefore thinking harder about who they reward, and why.

Last year American companies slashed pay bills by simply sacking staff. They announced almost 2 million job cuts, compared with 614 000 in 2000, according to Challenger Gray & Christmas, a consultancy. The pace of lay-offs seems to have slowed, despite a series of recent bankruptcies, including Enron, Kmart and, this week, Global Crossing: firms announced 161 600 job cuts in December, compared with September's peak of 248 300.

Lay-offs carry costs: cash-strapped companies cannot afford big redundancy payments; and repeated rounds of cuts wreak havoc with morale. To minimize the harm, "measure twice, cut once", like a careful tailor, advises Bill Coleman of Salary. corn, a website that tracks employment news. Or send staff home when demand is slack, as did Hewlett-Packard, a computer giant, over Christmas.

But neither lay-offs nor mandatory time off can help for long with the basic problem: the need to live with slack demand and flat or falling prices. Only 7%of firms surveyed by the NABE had raised their prices in the previous three months. And the future looks similar: nearly a fifth of managers surveyed said they expected the prices they charged for their products to fall over the next three months.

The most obvious way to live with such pressure is to pare employment costs. Some firms have already frozen or even cut pay. Thus Airbus, whose employees were due for a 4% rise in January, has persuaded staff to accept a freeze, and replaced payments for overtime with extra time off.

Companies hate cutting basic pay. But lately, a few embattled businesses have done so. The Tribune newspaper group, America's second-largest, announced in November that it would cut salaries for 140 senior managers by 5% in 2002, and freeze the pay of other employees, because of the advertising slump. At LTU, a German airline, staff agreed in November to give up their Christmas bonus and accept cuts of 5—10% in pay and a two-year freeze in the hope of keeping their jobs.

As companies draw up their pay budgets for 2002, they are being even tougher than they were in 2001. A survey last October by William M. Mercer, a pay consultancy, found that 19% of companies had cut the pay increase they originally planned in their budgets. Steven Gross, head of Mercer's employee compensation practice in America, expects more to do so: in 1990, a year of recession, 1% of employers froze budgets, but that figure climbed to 9% by 1992, as the recession abated. Another survey of American employers, by Towers Perrin in December, found that one in four had decided to freeze the salaries of top managers, and one in seven the pay of other employees too.

But lay-offs and freezes don't make a pay policy. Alan Stewart, the new chief executive of the British arm of Thomas Cook, a travel agency, has already announced redundancies and pay cuts for 2002. Now, he is scrutinising the benefits package, to make sure that staff know its true cost and to let them choose how far they prefer, say, pensions to current pay. He also wants to spread the message that career progression will not mean earning more each year in the same job, but doing different things in the organization. In a flat operating structure, it may be hard for people to increase their basic pay. Instead, Mr. Stewart talks of rewarding people by enhancing their employability, and he accepts the likely consequence: "We don't mind if good people come in for a couple of years and then leave. In a few more years, we may have a real slot for them."

Ranking the Rank-and-File Other executives are concentrating on identifying and rewarding their most valuable staff. Marriott, a hotel group, recently redrew its bonus plan. As a result, fewer people win rewards as top performers, but those who do get more, says Karl Fischer, who runs the compensation unit. In the coming year, he will increase Marriott's merit budget by 3%, down (like the industry at large) from 4% last year; but the best staff will receive up to 6%.

Policies such as these have grown easier since the last downturn, because of the spread of variable pay. Almost all American companies now include some form of flexible reward—usually performance bonuses—in their pay packages. Consultants such as Crawford Gillies, of the London office of Bain, help companies to calculate the value of a relationship with a particular kind of customer. They are now starting to do the same with employees, discovering who does most to help the bottom line. With one retailer, the answer turned out to be not the store manager but the merchandising manager, one rank down.

Other consultants, like Diane Gherson, who heads the employee pay consulting practice at Towers Perrin, are busily telling managers how to rank staff in various ways, as is commonly done at General Electric, Intel and Microsoft, and then concentrate rewards on the people at the top. Even in egalitarian Europe, companies increasingly reward some workers more than others, says Hans B head of the German Association for Personnel Management. In addition, faced with a growing threat of lay-offs, works councils are becoming more willing to see sackings of workers with high rates of absenteeism.

But benchmarking employees, and then paying them different rates, can turn out to be a minefield if handled badly. Take Ford, which tried to introduce a radical staff- ranking scheme in the late 1990s. Workers protested loudly about the car maker's ranking criteria, and the scheme was, in effect, scrapped.

In any case, sheer shortage of cash will make it hard for many companies to reward good performance generously. In America, most companies are freezing or cutting the overall level of merit bonuses for this year, and one in ten plans to pay no bonuses at all. Those that want rewards to be cost-effective but memorable are seeking the services of firms that specialize in employee recognition, such as 0. C. Tanner. Increasingly, says Kent Murdock, its chief executive, companies want to give Rolex watches or crystal knick-knacks to reward special performance. Spend $3 500 on a bonus for a valuable employee, and he is unlikely to weep for joy; spend the same on a fancy watch, and he just might. Now there's a way to motivate frugally.

Reading aids and expressions：

1、The pace of lay-offs seems to have slowed, despite a series of recent bankruptcies, including Enron, Kmart and, this week, Global Crossing： firms announced 161,600 job cuts in December, compared with September’s peak of 248,300.

此句相当于一个并列句，冒号相当于一个并列连词

在前一个分句“The pace of lay-offs seems to have slowed…”中，“seems to have slowed”中的“to have slowed”是动词不定式的完成式，表明其动作发生在谓语动词“seems”之前，意思是“似乎已经放慢了”，如：

　　1）They seem to have learned some English.他们似乎都已学过点英语。

　　2）The car seems to have been invlived in a traffic accident.这车似乎出过车祸。

2、wreak havoc with

to completely disrupt 破坏，e.g.

　　1）Her visit that night wrecked havoc with my plans.她那天晚上的造访把我的计划全打乱了。

　　2）The delay in the flight wreaked havoc with their travel arrangements.航班的延误把他们的旅行安排给搅和了。

3、And the future looks similar： nearly a fifth of managers surveryed said they expected the prices they charged for their products to fall over the next three months.

　　1）此句相当于一个并列句，冒号相当于一个并列连词

　　2）在后面一个分句中，nearly a fifth of managers surveryed said是主谓部分，过去分词“survey”作定语，修饰主语“managers”,“they expected the prices they charged for their products to fall over the next three months”是宾语从句，作“said”的宾语

　　在宾语从句中，“they charged for their products”是限制性定语从句，修饰名词“prices”，动词不定式“to fall over the next three months”作宾语“the prices”的补足语

4、Now, he is scrutinizing the benefits package, to make sure that staff know its true cost and to let them choosoe how far they prefer, say, pensions to current pay.

在此句中：

　　1）he is scrutinizing the benefits package 是主要部分

　　2）to make sure that staff know its true cost 和 to let them choosoe how far they prefer, say, pensions to current pay是两个动词不定式短语，作目的状语，其中：

　　that staff know its true cost和how far they prefer, say, pensions to current pay是两个宾语从句，分别作“make”和“prefer”的宾语，“say”是作为插入语

5、rank-and-file

　　the people who form the major portion of a group, organization, or society, excluding the leaders and officers普通员工；普通群众，e.g.

　　1）Political candidates will often seek rank-and-file support in their election campaign.政治候选人在竞选中常常去争取民众的支持。

　　2）The party's rank and file are beginning to question the prime minister's choice of advisers.普通党员开始质询首相对顾问的挑选。

Questions：