The majority of Canadian companies are being selective when it comes to 2009 workforce reductions and compensation cuts, according to two recent studies from consulting and investment services company Mercer.

The surveys of human resource and finance professionals indicate that employers are taking a considered response to the human capital challenges they face as a result of the global economic downturn.

In particular, the Mercer 2009 Salary Budget Planning poll conducted in January found that 17% of employers are planning to freeze salaries for 2009.

Among those planning salary increases, the average planned salary increase is 3.1%, down from the 3.5% reported in October 2008 and 3.8% in August 2008.

Taking into consideration the organizations that report salary freezes, the average planned salary increase will be 2.6%.

“Overall, there certainly is a cooling on salary budgets, but not a deep freeze at this point,” said Iain Morris, national partner at Mercer.

Meanwhile, Mercer’s ‘Unprecedented Times’ survey of firms around the world, conducted in November 2008, produced comparative results.

Of more than 1,000 respondents, 81% expect their company’s business and financial performance to decline in 2009, compared to 2008 levels.

In Canada, 78% of participants felt a decline in business was likely or very likely. But despite a disappointing financial outlook, the survey shows that most companies have refrained – at least so far – from taking severe and broad-based steps such as deep workforce cuts, across-the-board salary freezes, elimination of certain health benefits, and reductions in defined contribution plan contributions.

One-quarter of the Canadian respondents expect to make a significant reduction to their workforce, compared to one-third of the full sample of global survey participants.

While employers plan to curtail overall hiring, reduce 2009 salary increases, and cut bonus payouts, they also plan to continue hiring talent to fill shortages in key skill sets and maintain employer contributions to retirement plans.

“Retention strategies and selective hiring for key skill sets should remain a high priority,” said Morris. “Three-quarters of Canadian participants state they intend to hire top talent at originally planned levels.”

Morris added that while job cuts may be necessary, companies should focus on long-term goals.

“The all-too-familiar tactic of cutting to a headcount quota is rarely the best solution,” Morris said. “Instead, companies need to identify which of their business units will create value going forward and map these to their future talent needs.”

The Unprecedented Times survey also found that 41% of Canadian employers witness a significant level of employee concern about the impact on their retirement investments.

Nearly a quarter said employees had expressed significant concern about the health of the company, and 23% said employees had a high level of anxiety regarding their job security.

“Worrying about tough times can lead to a decline in employee engagement, productivity and loyalty,” Morris said. “Frequent, open and sustained communication is necessary to clarify the health of the company, what actions are critical to its success, and how employees can help.”