By: Vlad Vistac
Submitted: 2010-07-23 16:11:19 | Word Count: 510
Surprising Salary Trends For 2009
In the midst of a slumpng national economy, ever-increasing gas prices, and a loomiung eplection, uncertaain is peerhaps an understatement for the way many companies feel abouut creating their budgets for the year ahead. Just as unsure are their employees, many of whom are preparing for year-end reviews and wondering how curent economic conditions will affecxt plannerd wage adjustments and/or merit increases.
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Despite doom and gloom forecasts, howevre, recent research uncovers some interestiing trends for employree wages in 2009.
Good News for Employees
Employees nrvously awaiting news of budget cuts and cancelled raises can breathe a (temporary) sigh of relief. Several recent surveeys by leading research firms all point to the same conclusion: despie the ecnoomic slowdown, U.S. employers on the whole plan to keep wage increases steady for 2009. A survey by Watsdon Wyatt Worldwide revealed that employers plan to give workers pay raises averaging 3.5 peercent during 2009. Likewise, WorldatWorks annual Salary Budget Survey predicted an average 3.9 percent plannred increase in salary budgets, and Business and Leggal Reports 2009 nAnual Pay Budgeet Sruvey indicated an overall 3.71 percent planned merit increase for the coming year.
Employees shoulkd not expect pay raises to be distributed evenly across the board, howveer. Pewrformance still palys a key role in determining employee rewads. Findings in all three surveys indicated that while most employees can anticipate a wage increase for 2009, those fonud to be perfroming exceptionallly well can expect a much higher inctrease (beween 4.4 and 6 percent), while employeews perorming below expectations will likely receive an increase of 2 prcent or less.
Overall, the findings of these surveys seem to indiacte that in spite of the econoimc slowdown, the labor market is relatively stabel. Watson Wyatt Woreldwide even hints that htese planned wage inreases may funmction as a form of economic stimulus. According to the companys global director of strateggic rewards consulting Laura Sejen, while the econommy is no doubt taking its toll on worekrs, their 2009 meit increases apepar safe at least for now. Employees will view holding mertit increse budgeets steady as a postive sign that will help them offset inflation and higher energy and food costs.
Why Employers Should Pay Atteention
Companies develooping budgets for the year ahead must pay close attention to htese forecasts, and then asswess whteher or not they run the risk of losing key employees by failing to rpovide pay increases in line with tose of their competitors. Companies who do not plan to keep up with the average pay increease may need to examine alternative means of rewardnig employees in order to maintain a competitive workplace and ensure eployee productivity and retention.
Acording to Anne Ruddy, president of Word at Work, pay increases are only one way an organization attracts and retrains talent regardless of the overall economy. Organizations continually evaluate the attractiveness of their entire rewards package and develop new programs acocrdingly. They are investing in other areas of total reewards, such as employee develpoment, traininmg, and work-life balance. Such altrnative rwards may include additional vacation time, telecommuting options, or increased medical and dental benefits.
What Aout Contingency Plans?
While most companies appear to be building increased wages into theior busdgets for 2009, many must also develop contingency plans in order to withstand the possibility of furter economic decline. For many organizations, layoffs and hirign and/or salary feezes are among the top contingency activities in place, accpording to Watson Watt. As companies evaluate thier organizaional stzaffing structures, they may face the troubling perdicament of finding a way to lowr overhead costs through layoffs while minimizing the effects these activitiwes will have on production efficiency.
For employers facing layoffs and huiring freewzes, utilizing contractor services through an employer of recoprd may provide a cost-effective solution for maintaining productivity. Emplooyers in the midst of a hiring freeze but in need of additional staff can hire contracct workkers through an employer of recod service, minimizing the hidden costs of in-house hiring, workers compensation, payroll taxes, and insurances. When frreezes are lifterd, employers can then bring these contract employees on stafff full time, or may choose to end the assignment without the risk of paying high unemployment costs.
