Dear Sonia,
Looking at the current market scenario, there won't be any hike for senior levels, but to retain lower-level employees, we have to give hikes. The most affected industries are IT, Banking, Retail, etc.
Most companies are likely to tighten the screws on performance. This may entail longer work hours, work that is not of your choice, and lower tolerance towards non/weak performance.
With organizations cutting down on their expansion plans or facing lower business growth, forget about the promotion you were expecting.
More and more organizations will adopt the Jack Welch model of purging the bottom 10 percent (asking the bottom performers to go). In some sectors, such as retail, realty, textiles, and apparel, this figure may be higher.
Don't be surprised if you are suddenly transferred to a department/location that is not of your choice.
Companies are likely to have a conservative approach to percentage increments, and some sectors could see single-digit increments.
Employees in the top quartile of performers in their organization may earn similar increases to previous years. However, the rest may see a drop in percentage increments. We are likely to see a few cases of 'increment holidays' and isolated instances of pay reductions.
Variable bonuses will be subdued, but sales employees may see stronger incentive schemes since organizations will try hard to shore up their revenues.
The silver lining in all this is that with organizations going slow on external hiring, they will look for internal candidates. The external job market will also contract, but that does not mean there will be no job opportunities. Job opportunities will largely be fueled by employee attrition/turnover.
The demand for freshers will see an acute drop. The practice of fat signing-on bonuses is likely to be suspended. Largely, it is going to be a clear case of higher supply and lower demand. The only exception in the external job market is going to be for the 'star performers'.
Here are some pointers for those of us who will be impacted by the above scenario:
The first priority should be to secure your job and ensure that your name does not figure in the list of outplaced employees. Pull up your socks and ensure that you do not belong to the bottom quartile of performers.
Be patient. Do not get upset at the lower increment or delayed promotion.
Be extra cautious when making a decision to change jobs. Unless the reason is compelling, you are possibly better off staying in your current organization. If you do choose to make a change, negotiate hard with your new employer for a good hike and, if possible, a 'parachute mechanism' in case you are a victim of a layoff in the first year of your joining. This means you must be given 3-6 months' compensation in case you are laid off.
If you are in one of the highly volatile industries (retail, realty, finance, or banking) and feel that your organization is showing signs of vulnerability, proactively scan the external job market.
If you get an opportunity with a more reliable and stable brand, make the shift (even at the same salary). Look for signs of distress in your organization (delayed salaries, vendors not being paid, senior managers leaving).
In your existing organization, take a lot of initiative and be seen as a solid contributor in your team. If you have time, upgrade your skills. Try to be in the good books of your boss without compromising your conscience.
Salaried professionals have to wake up to the reality of what a downturn really means and 2009 is going to showcase enough of it. So far, the situation is not as severe as to drop the 'oxygen masks', but yes, the 'seat belt' sign has been switched on.