Employers Plan for Lean 2012 Pay Increases - WorldatWork

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Oct. 20, 2011 — Workers can expect modest pay raises, averaging 2.8% next year compared to 2.7% in 2011 and 2.9% in 2010, according to a survey released by Buck Consultants.

The survey, "Compensation Planning for 2012," also found that pay-for-performance remains as crucial as ever, given the importance of effectively allocating budgets to retain top performers. 80% of respondents have a pay-for-performance philosophy, although this is down from 87% last year.

"Our research into pay practices reveals that most employers plan to hold the line similar to 2011," said Stephen Mork, principal at Buck Consultants. "Given the slow economic recovery and stubborn unemployment rate, organizations are taking a cautious and conservative approach to compensation planning to stay within their payroll budgets."

Key findings:

• Average promotion increases range from 5.7% (for C-suite employees) to 7.3% (for the vice-president level).
• The most prevalent type of short-term incentive pay is a companywide plan with an individual performance component. These bonuses are relatively unchanged from last year.
• A blend of stock options and full-value awards (time- and performance-based restricted stocks) remain the most prevalent long-term incentive awards for C-suite employees. Broad-based employee groups are most likely to participate in time-based restricted stock plans.
• Organizations' top talent-related priorities for 2012 are retention (62%) and engagement (56%).
• Actions for retaining top performers include:
  
  
  • New career development opportunities (64%)
  • Market pay adjustments (43%)
  • Larger base pay increases (30%)
  • Increased non-cash recognition (28%)
  • Larger bonus opportunities (21%).
• 52% of organizations offer a hiring or retention bonus to employees with specialized industry or product knowledge.
• Referral bonuses are offered by 56% of employers. More than three-quarters (77%) of respondents who provide these bonuses cite a better chance of getting a strong performer.
• 73% of respondents communicate their pay increase budgets with managers and employees.

Buck Consultants completed its survey in August. The survey includes responses from more than 280 employers, representing virtually every sector of the U.S. economy. It examines competitive compensation strategies, metrics for monitoring labor costs, and the use of technology to support compensation program administration.

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