Average Salary Increase 3.9% in 2004

December 30, 2004 (PLANSPONSOR.com) - The average salary increase in 2004 was 3.9%, with this number expected to decrease slightly in 2005 to 3.8%.

These are the results of the 2004 Year-End Compensation Survey produced by Compensation Resources, Inc. (CRI), a compensation and HR consulting firm. The largest salary increases were seen with executive positions, which posted a 4.3% increase on average, 0.5% ahead of management positions. These increases are expected to remain constant in the coming year.

Exempt-salary workers received slightly higher pay increase than their non-exempt counterparts, with the former seeing a 3.6% increase, compared to only 3.5% for the latter. Hourly workers received a 3.5% salary increase on average.

Companies with over 10,000 employees saw the smallest increases, according to the survey.

Short-term incentive plans are much higher in publicly-traded companies, according to the survey, and it was also found that target awards as a percentage of base salary increase as revenues increase. Non-qualified stock options were the most common plans in 2004, and stock appreciation rights were the least common. Base salary makes up the largest component of overall salary, followed by incentive plans and then bonuses.

The survey also looked at layoff, hiring freeze and staffing increase actions, and found that only 13.5% of companies plan to lay off workers in the coming year, down from 28.8% this year. Only 9% plan to institute salary freezes, compared to almost 20% this year. However, there will be fewer staff increases in the coming year, with 45% of companies planning to hire new workers, down from 46.8% in 2004. Zero percent plan to institute pay cuts, the same percentage as last year.

The survey looked at 14 industrial classifications, as well as Not-for-Profit organizations, and collected data in October and November. The survey is available here .

Also, CRI, surveying firms in December, found that 43.3% of companies will offer higher bonuses than they did in 2003. In 2003, the number stood at 23.6%.