Employers Focus on Total Compensation Packages

July 20, 2005 (PLANSPONSOR.com) - Base salary levels will remain steady while employers will turn to bonuses and other awards to compensate their employees, according to a survey by Mercer Human Resource Consulting.

The survey of around 1,350 employers in the US shows that pay increases for 2005 at 3.6% were only slightly above the 2004 level and will remain at 3.6% in 2006. However compensation in the form of spot cash awards and signing bonuses is gaining favor with employers. Mercer said in a news release that 55% of respondents are using signing bonuses; 65% of those were in the IT field.

Spot cash awards are popular among many job fields, with 82% of IT employers reporting using them, 76% of accounting/finance employers, and 72% of both sales & marketing and human resource employers.

“We’re also finding that leading companies are taking a total rewards approach to compensation. They’re addressing pay issues from three perspectives – what employees value, what companies need in terms of skills and capabilities to grow the business, and affordable and sustainable costs,” said Steven Gross, leader of Mercer’s Employee Rewards business in the US, in the news release.

The news release mentions other key findings from Mercer’s survey, including:

  • Eighty six percent of employers report using variable pay such as signing bonuses, spot cash awards, and project milestone awards.
  • When asked how individual performance impacts short-term incentives, respondents said it drives 18% of an executive’s award, 22% of management’s, 27% of professionals, and 25% for both nonexempt and nonunion employees.
  • For the sixth year in a row, non-monetary recognition awards top the chart with 70% of employers offering them and 9% planning to offer them.
  • The use of stock options declined from 37% in 2002 to 31% in 2005.
  • The number of employers reporting salary freezes has dropped from 16% in 2002 to just 2% in 2005.

More about Mercer can be found at www.mercerHR.com . A free registration is required.