Large Employers Expected to

Indicators are much more positive now than they were at this time last year,  find out how major employers are planning to handle salary increases and bonuses in 2010.

According to a recently released report from Hewitt Associates , a global human resources consulting and outsourcing firm, we can be thankful that most employers are "holding steady" on 2010's salary increases and bonus payouts.  In this survey released on November 19th, 555 large employers found that base salary increases for salaried exempt, salaried nonexempt, and nonunion hourly employees are expected to be 2.5% in 2010, slightly reduced from original projections of 2.5%.

Unlike this time last year, the majority of U.S. employers are maintaining their existing compensation budgets for 2010, making only minimal changes to salary increases and employee bonuses.  Better yet, the number of companies expecting to freeze or reduce salaries has "declined dramatically" compared to last year, as companies look toward the New Year with cautious anticipation and prudent planning to control labor costs.

In a year where most employees considered job security of paramount importance, the survey reported that actual pay raises for workers in 2009 were 1.8% for salaried exempt, 1.4% for executives and 2.2% for union employees. 

On another encouraging front, employers are no longer planning to freeze or reduce salaries next year.  The recession resulted in nearly half (48%) of employers took those serious steps to preserve jobs and control costs over the past year.  Yet only 17% are considering taking these measures in 2010.

"Many companies are still finalizing their 2010 compensation budgets, but the good news is that most don't seem to be taking the same types of drastic cost-cutting measures we saw at this time last year," said Ken Abosch, head of Hewitt's North American Broad-Based Compensation Consulting practice. 

"As organizations remain under enormous pressure to hold down fixed costs, we'll continue to see an emphasis on variable pay approaches.  These types of performance-based awards give companies more flexibility, allowing them to adjust payout amounts based on business and personal performance, without being tied to fixed costs associated with base salary increases."

Hewitt survey has found that variable pay spending as a percentage of payroll has almost doubled over the past 15 years, rising from 6.4% in 1994 to 11.2% in 2009.  Almost two-thirds (64%) of those employers link individual performance to variable pay.

It appears from a variety of corroborating reports from many compensation sources that 2010 will offer modest merit increases, increased use of variable pay, and a more stable employment picture for the 88-90% of people now employed.  Given where we've been over the past year, in my book that's plenty to be thankful for as we anticipate the new year. 

Copyright 2009, Regan HR, Inc.

Article Tags: Large Employers, Salary Increases

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