Nearly one-fourth of U.S. organizations that froze pay in 2009 plan to prolong that freeze into 2010, while more than 50 percent plan to resume normal pay levels, according to WorldatWork’s latest salary budget survey update.
Many organizations plan to remain conservative in their approaches to their 2010 pay practices, according to the findings released Jan. 19, 2010.
“Employers are taking a ‘wait and see’ stance when it comes to returning to normal pay practice,” said Jim Stoeckmann, CCP, WorldatWork compensation practice leader, in a news release.
“There are risks both ways. Moving too fast in restoring salaries and merit budgets leaves employers vulnerable if the [economic] recovery fails to materialize. Moving too slowly creates the risk of turnover as employees look for a better opportunity with another company. Even with jobs scarce, there are always opportunities for employees with the right skill set.”
The findings are from the second of two updates WorldatWork conducted following its initial survey in April 2009; the most recent update was fielded in October 2009. The 875 respondents were employers with U.S. operations and WorldatWork members working in HR, compensation and benefits at mostly large companies.
There were no major differences between regional data and overall findings. Most regions, states and major metro areas reported a continuing downward trend in projected 2010 salary increase budgets, according to the report.
Salary structure adjustments are following the same trend as salary budget increases—downward. Overall, plans for variable pay programs do not appear to be shifting like salary budget increases and structure adjustments.
Among the findings from the January update to the 2009-10 Salary Budget Survey:
- 52 percent of U.S. employers froze pay in 2009 for some or all employees.
- At least 22 percent are planning to prolong the pay freeze in 2010; 54 percent plan to resume normal pay in 2010.
- 13 percent of U.S. employers cut pay in 2009.
- 37 percent of U.S. employers said they were still in recession and not considering restoring cut pay; 29 percent plan to restore pay in full; 15 percent said pay cuts were permanent.
- The percentage of organizations planning pay freezes in 2010 climbed to between 15 percent and 20 percent in October 2009. In July 2009 it held steady at 10 percent to 14 percent.
Organizations are looking for other ways to motivate and reward employees in the face of tight budgets and low job satisfaction, according to WorldatWork.
This includes career development (33 percent); noncash rewards and recognition (28 percent); leadership training on employee motivation (21 percent); flex options (20 percent); and monetary rewards for high performers (19 percent) and for workers considered mission-critical (15 percent).
Focus employees’ attention on the whole reward package, advises WorldatWork research manager Alison Avalos.
“Employers can cultivate employee loyalty by highlighting noncash rewards, particularly for key employees. These programs validate the employee’s time, effort and talent, even in the absence of salary increases,” she said in a news release.