Top Performers Still Get Generous Pay Bumps
class=”NormalIndent2″> The latest salary poll from Mercer found that although pay increase budgets remain virtually constant on a year-over-year basis, organizations are broadening performance differentials by granting notably beefier salary increases to their top performers, according to a news release. The highest-performing employees (14% of the workforce) are expected to receive base pay increases of 5.6% in 2009 compared to 3.3% for average performers (36% of the workforce) and 0.6% for the weakest performers (7% of the workforce).
class=”NormalIndent2″> In general, U.S. employers plan to award average pay increases of 3.7% in 2009, compared to 3.8% in 2008.
class=”NormalIndent2″>Increases to base salaries differ among all industry sectors. Compared to the expected average pay increase of 3.7% in 2009, U.S. employers within high-performing industries plan to grant salary increases that are up to one-quarter higher, Mercer said. The oil and gas and the business process outsourcing industries report the highest projected pay increases of 5% and 4.7% for 2009, respectively.
class=”NormalIndent2″> “The tight economy has made the marketplace extremely competitive,” said Steve Gross, global leader of Mercer’s broad-based performance and rewards consulting business, in the news release. “Despite budgetary constraints in other sectors, growth industries are likely to boost salaries to attract and retain talent required to continue their performance levels.”
class=”NormalIndent2″> Mercer’s survey shows companies widening performance differentials for short-term incentive payouts, as well. The highest-performing management level employees are expected to receive average short-term incentive payouts of 36% compared to just 8% for the lowest performers. Similarly, incentive payouts for high-performing office/clerical/technical positions at 13% are more than four times that of the low performers in the same group (3%), Mercer said.
class=”NormalIndent2″> In contrast, other industries expect to award less than average pay increases in 2009. Retail is among these sectors with a projected increase of 3.4%, and wholesale distribution, durable goods and education sectors project a 3.5% increase.
class=”NormalIndent2″> Mercer’s study, which has been conducted annually for more than two decades, includes responses from more than 1,000 employers across the U.S. and reflects pay practices for more than 12 million workers. The survey results are captured for five categories of employees: executive, management, professional (sales and non-sales), office/clerical/technician, and trades/production/service.
class=”NormalIndent2″>To purchase the full report of the survey, visit www.imercer.com/cps or call 800 333 3070.
Table 1: 2008/2009 budgeted pay increases
align="center"> Budgeted align="center"> 2008 | align="center"> Projected align="center"> 2009 | |
All Employees | align="center"> 3.8% | align="center"> 3.7% |
Executive | align="center"> 4.1% | align="center"> 3.9% |
Management | align="center"> 3.8% | align="center"> 3.7% |
Professional (Sales & Non-sales) | align="center"> 3.8% | align="center"> 3.7% |
Office/Clerical/Technician | align="center"> 3.7% | align="center"> 3.7% |
Trades/Production/Service | align="center"> 3.6% | align="center"> 3.6% |
2008/2009 US Compensation Planning Survey
Table 2: 2009 base pay increases as a function of performance
class="Tble-Bold"> | class="TbleBold-RightAlign" align="center"> Percent of Workforce | class="TbleBold-RightAlign" align="center"> Average Pay Increase |
class="Tble-Plain"> Highest-rated | class="TablePlain-RightAlign" align="center"> 14% | class="TablePlain-RightAlign" align="center"> 5.6% |
class="Tble-Plain"> Next Highest-rated | class="TablePlain-RightAlign" align="center"> 25% | class="TablePlain-RightAlign" align="center"> 4.3% |
class="Tble-Plain"> Middle-rated | class="TablePlain-RightAlign" align="center"> 36% | class="TablePlain-RightAlign" align="center"> 3.3% |
class="Tble-Plain"> Low-rated | class="TablePlain-RightAlign" align="center"> 18% | class="TablePlain-RightAlign" align="center"> 1.4% |
class="Tble-Plain"> Lowest-rated | class="TablePlain-RightAlign" align="center"> 7% | class="TablePlain-RightAlign" align="center"> 0.6% |
2008/2009 US Compensation Planning Survey
Table 3: Short-term incentive payouts based on 2007 performance (typically paid in 2008)
class="2003Bodytext">
class="Tble-Plain"> | class="Tble-Plain" align="center">
| class="Tble-Plain" align="center">
| class="Tble-Plain" align="center">
Professional
| class="Tble-Plain" align="center">
Office/
| class="Tble-Plain" align="center">
Trades/ Production/
|
Highest-rated | align="center"> 66% | align="center"> 36% | align="center"> 22% | align="center"> 13% | align="center"> 12% |
Next Highest-rated | align="center"> 49% | align="center"> 27% | align="center"> 17% | align="center"> 9% | align="center"> 8% |
Middle-rated | align="center"> 40% | align="center"> 23% | align="center"> 14% | align="center"> 8% | align="center"> 7% |
Low-rated | align="center"> 26% | align="center"> 14% | align="center"> 8% | align="center"> 4% | align="center"> 4% |
Lowest-rated | align="center"> 20% | align="center"> 8% | align="center"> 4% | align="center"> 3% | align="center"> 2% |
2008/2009 US Compensation Planning Survey
class="Tble-Plain"> Table 4: 2008/2009 budgeted pay increases by select industry
class="2003Bodytext">
class="Tble-Plain"> Industry | class="Tble-Plain" align="center"> Budgeted class="Tble-Plain" align="center"> 2008 | class="Tble-Plain" align="center"> Projected class="Tble-Plain" align="center"> 2009 |
class="Tble-Plain"> Oil and Gas Upstream | class="Tble-Plain" align="center"> 5.0% | class="Tble-Plain" align="center"> 5.0% |
class="Tble-Plain"> Business Process Outsourcing | class="Tble-Plain" align="center"> 4.8% | class="Tble-Plain" align="center"> 4.7% |
class="Tble-Plain"> Business/Professional Services | class="Tble-Plain" align="center"> 4.4% | class="Tble-Plain" align="center"> 4.2% |
class="Tble-Plain"> Insurance - Life | class="Tble-Plain" align="center"> 4.0% | class="Tble-Plain" align="center"> 3.8% |
class="Tble-Plain"> Healthcare | class="Tble-Plain" align="center"> 3.8% | class="Tble-Plain" align="center"> 3.8% |
class="Tble-Plain"> Hospitality/Restaurant | class="Tble-Plain" align="center"> 3.7% | class="Tble-Plain" align="center"> 3.7% |
class="Tble-Plain"> Utilities - Energy | class="Tble-Plain" align="center"> 3.7% | class="Tble-Plain" align="center"> 3.7% |
class="Tble-Plain"> Banking | class="Tble-Plain" align="center"> 3.6% | class="Tble-Plain" align="center"> 3.5% |
class="Tble-Plain"> Food | class="Tble-Plain" align="center"> 3.6% | class="Tble-Plain" align="center"> 3.7% |
class="Tble-Plain"> Education | class="Tble-Plain" align="center"> 3.5% | class="Tble-Plain" align="center"> 3.5% |
class="Tble-Plain"> Durable Goods | class="Tble-Plain" align="center"> 3.4% | class="Tble-Plain" align="center"> 3.5% |
class="Tble-Plain"> Retail | class="Tble-Plain" align="center"> 3.4% | class="Tble-Plain" align="center"> 3.4% |
2008/2009 US Compensation Planning Survey