While the overall change wasn’t much, firms that are currently planning to trim the 2002 pay budgets have done so dramatically. At those firms, executive pay increases slashed from 4.5% to 3.0%, with a comparable cut for salaried workers. Non-exempt salaried worker projections at those firms were now planned at 3.2%, down from a previous projection of 4.2%, while hourly worker pay is now projected to increase at just a 3.2% rate, rather than the 4.4% originally projected.
And more than 40% of the 77 major companies responding to the survey said they planned to reduce planned pay increases in response to new economic conditions, according to the report.
Still, overall median executive pay increases for 2002 are projected at 4.0%, rather than earlier projections for a 4.2% rise, and a 2001 rate of 4.5%. Hourly workers might now be looking at a 3.9% raise, rather than a 4.0% projection, which matched the 2001 rate.
According to the survey, among those firms that have not taken action on 2002 pay raises, most said they have no plans to reduce their compensation budget.
Other cost cuts planned or underway include:
- delaying merit raises (most commonly cited)
- temporarily reduce or eliminate matching 401(k) contributions
- salary freeze for top management/officers
- shift from salary to variable pay
- reduce bonuses