All Employers Not Rushing to Restore 2009 Pay Curbs

January 29, 2010 (PLANSPONSOR.com)–A newly released WorldatWork salary study found that 52% of U.S. employers froze pay last year, while13% instituted pay cuts.

A WorldatWork news release said that of the organizations freezing pay last year, 54% plan to bring salaries back to pre-downturn levels, while more than a third said their salary structure would remain the same for now. About a quarter of organizations that had no pay increase budget in 2009 still plan for no pay hikes in 2010.

Meanwhile, of those organizations that cut pay, 37% were not yet considering recovery actions; 29% planned to restore pay levels; and 15% said the pay cuts were permanent.

“Employers are taking a ‘wait and see’ stance when it comes to returning to normal pay practice,” said Jim Stoeckmann, compensation practice leader at WorldatWork, in the news release. “There are risks both ways. Moving too fast in restoring salaries and merit budgets leaves employers vulnerable if the 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.”

According to WorldatWork, organizations are turning to other ways than salary levels to reward employees. Employers are focused on providing or enhancing career development opportunities (33%), noncash rewards and recognition (28%), leadership training on employee motivation (21%), flexibility options (20%), monetary rewards for high performers (19%), and monetary rewards for mission-critical talent (15%), the news release said.

The study was fielded in October 2009. Survey respondents are WorldatWork members in the HR, compensation and benefits departments of mostly large U.S. companies. A total of 875 responses were received.

More information about purchasing the study is available here.

Fred Schneyer
editors@plansponsor.com