Companies' 2006 Merit Budget Increases Fall Below 4% in 2006

ORC Worldwide’s 2006 Budgets and Structure Adjustments Survey of more than 450 companies found that even though the projected increases are expected to be relatively the same in 2007, they are expected to be spread more evenly across employee categories, with both executives and exempt employees expected to have 3.78% increases and nonexempt employees to have 3.75% increases.

For 2006, executive merit budgets were higher, at 3.84%, than overall budget increases for employees, according to the survey.

The survey found that salary structure adjustments continue to make up 75% of the merit increase budget figures. For 2006, exempt salary structures were adjusted upward by 3% and the same is projected in 2007. Nonexempt structures were adjusted 2.9% in 2006 and are projected to be increased the same in 2006, the survey found.

The survey also measured 2006 actual and 2007 projected budgets in special budgets, variable pay and promotional budgets and found:

• Of the 34% of surveyed employers using special budgets to target specific needs, the majority do so to address internal and external equity issues, signifying a reliance on market salary data.
• 26% of the companies surveyed reported variable – or incentive/bonus – pay budgets in addition to their merit budgets with projections for 2007 up to 9.16% for the exempt group and 7.18% for the nonexempt employee group.
• 44% of the companies surveyed set aside and track a special pool for general and in-family promotions, with 2006 actual and 2007 projected promotional budgets for exempt and nonexempt employee groups remaining at approximately 0.8% of total base payroll.

To purchase a copy of the full survey go to http://www.orcinc.com/surveys/bsas2006.html .