Stay or Pay: Salary Increases in 2010

Tuesday, February 02, 2010


According to a recently released WorldatWork (formerly, American Compensation Association) survey conducted in October of last year, 25% of the 875 respondents indicated they plan to continue (Stay Put) with pay freezes in 2010. An additional 25% of respondents are uncertain what actions they will take relative to 2010 pay increases. The remaining 50% of those responding plan to resume their normal pay practices sometime in 2010.

A spokesperson for WorldatWork reportedly said that many employers are taking a wait and see attitude about 2010 pay increseaes. If an employer returns to their normal pay practices and the economy fails to recover, pay may be out of alignment with the market. However, if the employer does not return to their normal pay practices and the economy does recover, employers may face serious retention issues. (See my blog from 2-1-2010) The issue here, is that many of the economic indicators we rely upon are “lagging” indicators and we may not know that the economy has turned the corner until it is months after the fact. Obliviously, by that time, it may be too late.

So, what’s a fell’a to do? This is the time to be vigilant! Stay in touch with your network of fellow compensation practitioners. If available, talk to your retained HR/compensation consultants. Pay close attention to monthly economic reports at the national and local areas where you have operations. Reexamine the surveys in which you participate and make sure they are delivering what you need and when you need it. If possible, identify leading indicators for your business or industry.

If your management is dead set against returning to your normal practices, consider focusing on non cash rewards and recognitions, such as:

These include:

• Career development (Knowledge/Skill upgrade, Job Sharing, Cross Training)
• Non cash rewards (Time off, Gift cards, Movie Tickets)
• Employee recognition (Public recognition, "Wall of Fame" pictures, Company Newsletters)
• Leadership training (For your senior manager, Fast Trackers)
• Flex work/assignment options (Flex days or locations)
• High performer incentives (For those in the top 5%)
• Mission critical incentives (For that make or break project)
  

Even with unemployment at 10% nationally, your business sector, geographic locations or the skill sets your organization needs may not be at 10%. You need to understand the economics your business and your labor work force. Even in bad times, some skill sets are in short supply. Even with such high unemployment, you need to be working on and developing retention plans now so that when the economy does turn around, your best employees are more likely you stay.

Above all, be prepared to be flexible when your operations managers come to you with hints that they may be feeling the pressure of your wage freeze or slow down. Better yet, proactively reach out to your organization’s management team periodically and query them on any pay issues they may perceive are developing in their areas. Have contingency plans in place should you need to act quickly to either an enterprise wide situation or a need to address spot issues. Remember that 50% of the survey respondents plan to resume their normal pay practices in 2010, that should tell you something.