The current economic environment is causing organizations to balance the cost of reward programs and relatively low base salary increases with the need to attract, retain and engage the talent they need to run their businesses.
PHILADELPHIA – July 6, 2011 – U.S. employees can expect median pay increases of 3.0 percent in 2012, according to recently released Hay Group research. While these increases are consistent with forecasted base salary increases reported in June 2010, they are well below the 4.0 percent increases seen from 2005 to 2008. After factoring in annualized consumer price index growth at 3.6 percent, the resulting pay movement for 2012 is a net loss of 0.6 percent.
According to Hay Group’s research, 3.0 percent pay increases are being reported for executives, middle management, supervisory and clerical positions. And this picture is relatively consistent across most industry sectors.
“Even though the economy is recovering, the stagnant growth in pay increases indicates employees’ pockets will likely be permanently affected by the great recession,” said Jeff Blair, Hay Group’s U.S. Reward Information Services Leader. “Many organizations froze salaries or limited pay increases during the downturn and as a result, employees who are relatively new to the workforce will see their long-term earning potential significantly impacted.”
“The current economic environment is causing organizations to balance the cost of reward programs and relatively low base salary increases with the need to attract, retain and engage the talent they need to run their businesses,” said Tom McMullen, Hay Group’s North American Reward Practice Leader. “Differentiating rewards – ensuring that top performers receive compensation that is substantially greater than average performers – is a continued focus area for organizations.”
“In addition to ensuring that compensation amounts are differentiated, the best performing organizations emphasize and take care in managing the pallet of ‘total rewards’ for their employees, including clear career development opportunities, meaningful job designs, non-financial recognition and energizing work climates,” added McMullen.
About the Survey:
Hay Group’s forecast results are based on the latest data available from Hay Group’s U.S. database, provided by more than 310 U.S. organizations from March through June 2011. This is Hay Group’s 32nd year of conducting the survey. Typical respondents to the survey include compensation professionals in the Human Resources departments of small to large size U.S. organizations across a wide range of industries. Hay Group’s U.S. database represents compensation practices for almost 2,900 companies and over 6.6 million employees.
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