Companies plan double digit salary hike in 2010: Mercer
By siliconindia   |   Wednesday, 13 January 2010, 20:08 IST   |    7 Comments
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New York: As the economy emerges from the wreckage of the economic slowdown, more organizations are planning to grant pay increases in 2010. Including salary freezes, average base pay increases for 2010 are projected to be 2.3 percent. According to Mercer's 2009/2010 U.S. Compensation Planning Survey Update, the number of organizations freezing salaries have declined compared to last year. While challenging economic conditions drove 30 percent of employers to freeze salaries across the board in 2009, just 14 percent are planning across-the-board freezes in 2010. Mercer's most recent survey on pay trends, which was conducted in November and includes responses from more than 350 mid-size and large employers across the U.S., provides an update to its 2009/2010 U.S. Compensation Planning Survey from earlier this year. "While planned 2010 base increases have dropped a bit from employers' projections in April and are less than 2009 increases, this is still positive news given the fewer firm-wide pay freezes and staff reductions planned now compared to this time last year," said Loree Griffith, a Principal with Mercer's rewards consulting business. Of those employers granting base pay increases, the average increase is expected to be 2.7 percent in 2010, down from an actual 3.2 percent in 2009, and slightly less optimistic than the increases planned earlier this year for 2010. According to Loree, as companies prepare for an economic recovery, they are focusing on retaining employees and engaging top talent. "Employers are still juggling selective hiring with selective cuts in staff as they evaluate specific workforce needs," said Loree. "Recognition programs, career development, training opportunities and creative communication campaigns - efforts that help keep employees engaged and motivated - along with incentive pay strategies will give companies a competitive edge as business begins to improve." Consistent with base pay increases, Mercer's survey shows that short-term incentive payouts are projected to decrease slightly in 2010. On the whole, average payouts as a percentage of base pay for all employee groups are reasonably stable. Furthermore, differentiation of short-term incentive awards continues to vary by performance levels with the highest-performing employees projected to receive average payouts (as a percentage of base pay) of two to four times more than the lowest-performers. Despite projected 2010 salary increases that are lower than what has been experienced in recent years, industry variations are evident. While 20 percent of durable goods manufacturers and 18 percent of services firms are expected to maintain pay freezes in 2010, less than five percent of consumer goods and insurance firms are expected to have freezes. Compared to the expected average pay increase of 2.7 percent in 2010, employers within the consumer goods and high-tech industries have the highest projected pay increase at 3.0 percent. In contrast, other industries expect to award less than average pay increases in 2010. Education is among these sectors with a projected base pay increase of 2.2 percent along with health and medical insurance projected at 2.4 percent. "The marketplace for top talent remains competitive," said Loree. "Despite budgetary constraints, growth sectors are boosting salaries for select employees, and overall in some cases, in an effort to attract and engage talent necessary to continue at existing performance levels."

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