By JAMIE LEE

THE proportion of companies in Singapore that are cutting back on pay hikes has more than quintupled to 97.1 per cent in the eight months ended November, according to a survey by consultancy Hay Group.

But the proportion that is going ahead with bonuses for 2008 remained largely unchanged - two out of three.

'Companies are generally wary about cutting incentives and bonuses as it is a reward to employees for their past performance,' said Christian Vo Phuoc, Hay Group reward information services Singapore country manager, in a statement yesterday.

'As bonuses are already accrued for during the year, it is more financially prudent for companies to pay out bonuses than salary increases which will immediately impact next year's bottom line.'

According to another Hay Group survey of over 300 organisations here, companies are doling out an average of 3.3 per cent base salary increase, with an average variable bonus of 1.8 months.

Meanwhile, from the November survey, the proportion of companies that were keeping their current healthcare benefits rose to 83.7 per cent, from 59 per cent in a similar survey in March.

The proportion of firms that were not confident of meeting their business targets for 2008 has doubled to 21 per cent, from 10 per cent in March.

This, however, compares well with the 27.1 per cent of companies in Asia that are in the same boat. In March, only 8 per cent were not confident of meeting their business targets for 2008.

Close to 40 per cent of companies in Asia said in March that they were freezing salary increases. In November, the proportion more than doubled to over 80 per cent.

More companies in the region have also decided to make no changes to their short-term variable pay programmes - which includes bonus payouts - with the proportion reaching 66.4 per cent in November from 44 per cent in March.

Said Andrew How, Hay Group Singapore general manager: '2009 is going to be all about performance management . . . successful companies are more aggressive in managing top and poor performers; for example, by enforcing discipline around reward and performance, clearly defining and communicating what good performance looks like, and actively identifying and addressing poor performance.'

This article was first published in The Business Times on December 16, 2008.