At least 40 percent of salary budgets frozen for officers and executives, says WorldatWork survey of U.S. organizations
Washington, D.C. – Corporate salary budget increases have dropped to historic lows, according to the WorldatWork 36th Annual Salary Budget Survey. At 2.2 percent, the 2009 increase is the smallest in the survey’s history and 1.7 percentage points below the 3.9 percent that had been projected in the previous year’s report. The WorldatWork survey, the largest of its kind, clearly shows that the economic crisis continues to put pressure on worker salaries, though projections for 2010 suggest improvement.
The 2,600 respondents to the survey are WorldatWork members who are employed in the human resources departments of various employers, representing a total of 16 million U.S. employees.
“A projected salary budget increase of 2.8 percent for 2010 indicates we may have touched the bottom this year and a turnaround may be on the horizon,” said Anne C. Ruddy, CCP, president of WorldatWork. “While it’s heartening to think the worst may be behind us, salary plans will likely be in flux for at least the next 12 months. We plan to re-survey respondents this summer to monitor thawing of any kind.”
“This recession is having a greater impact on pay increase budgets than the previous recession brought on by 9/11, when employers still managed to increase salary budgets by 3.6 percent,” observed Alison Avalos, research manager for WorldatWork. In spite of the falling budgets, the survey shows employers are committed to awarding raises to about eight in every 10 of those employed. “This may come as a surprise to many given that one in three survey respondents indicated they are planning zero percent salary budget increases this year,” added Avalos. “Layoffs, hiring freezes, shifting pay increase dollars from executives to staff, and other cost-saving actions may be allowing employers to continue planning for at least some pay increases for remaining employees, especially top performers,” Avalos explained.
Human resource practitioners continue to use variable pay, which consists of cash bonuses and other incentives, to reward results. For 2009, employers are budgeting an average of 5 to 11.5 percent for variable pay, depending on employee category.
About the Survey:
WorldatWork collected survey data in April 2009. The full survey report includes results for North American regions, all 50 states, major U.S. metropolitan areas, major industries as well as data by organization size, performance category and employee category.
Additional data cuts are now possible via SBS Online, which gives subscribers the ability to customize data cuts. A free Webinar will be held on August 25 for members and non-members.
HR professionals use salary budget surveys to establish and defend salary increases for employees. In an independent survey by IOMA (April 2009), the WorldatWork Salary Budget Survey was rated the most popular source by 74 percent of large companies surveyed.
About WorldatWork®: The Total Rewards Association
WorldatWork (www.worldatwork.org) is a global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork provides a network of more than 30,000 members and professionals in 75 countries with training, certification, research, conferences and community. It has offices in Scottsdale, Arizona, and Washington, D.C.
