Compensation Planning Report 2011

Transcription

1 Compensation Planning Report 2011

2 Compensation Planning Report 2011 ISSN Pending This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From a Declaration of Principles, jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations. For inquiries about purchasing multiple copies of this report, please contact: Matthew Sottong, Research Director (msottong@bna.com)

3 s Table of Contents List of Figures... About the Authors... About this Report... v xi xii Section I: Setting and Managing 2011 Merit Increase and Bonus Budgets... 1 Merit Raises for 2011 Projected at a Modest 2.7 Percent... 3 Executive Merit Pay Increases at Record Low of 3.6 Percent for Companies Plan Bonuses for Salary Increase Budgets: 2010 Updates and 2011 Forecasts Four Surveys Find 2011 Salary Increase Budgets Remain Around 2.5 Percent to 3 Percent Hewitt Associates Survey: Companies Trim Raises & Bonuses for 2010, Expect Rebound for Over Half of Firms Plan Salary Range Movements for Section II: Setting and Managing 2011 Compensation Strategy Trio of Experts Forecast Compensation Trends, Cost-Saving Measures for Increases to Rebound & Pay Freezes to Thaw in Responding to Economy: Reduce, Restructure, and Redefine Responsibilities Efforts to Control Compensation Costs: Companies Cut Pay & Focus on High Performers Companies Top Compensation Concerns Organizations Set Compensation Budgets Late in the Year Companies Prepare for Future with Comp Plan Changes and More Training HR Relies on Many Data Sources to Determine Pay Levels Upper Management Works with HR to Set Compensation Companies Cut More Staff but Offer Severance Pay Half of All Companies Use Technology & Plan Compensation iii

4 Compensation Planning Report 2011 Gender Pay Gaps and the Effects of the Ledbetter Law Executive Pay Declines as Much as 30 Percent Section III: Setting and Managing a 2011 Performance Strategy Identifying and Rewarding High Performers with Performance Management Strategic Use of Variable Pay to Reward and Retain Employees Communication and Incentives to Counter Recession Fatigue Rewarding Employees When the Budget is Tight Appendices Appendix 1: Survey Resources Appendix 2: Cost Cutting Measures Undertaken by Surveyed Firms iv

5 s List of Figures Section I Figure 1.1: Expected Average and Range of Merit Increases (for fulltime, mid-level employees, including non-top executives) for 2011, by Number of Employees... 4 Figure 1.2: Actual Average and Range of Merit Increases (for full-time, mid-level employees, including non-top executives for 2010, by Number of Employees... 4 Figure 1.3: Expected Average and Range of Merit Increases (for fulltime, mid-level employees, including non-top executives) for 2011, by Industry... 5 Figure 1.4: Actual Average and Range of Merit Increases (for full-time, mid-level employees, including non-top executives) for 2010, by Industry... 6 Figure 1.5: Expected Average and Range of Merit Increases (for fulltime, mid-level employees, including non-top executives) for 2011, by Region... 6 Figure 1.6: Actual Average and Range of Merit Increases (for full-time, mid-level employees, including non-top executives) for 2010, by Region... 7 Figure 1.7: Expected/Actual Average and Range of Merit Increases (for full-time, mid-level employees, including non-top executives) for 2011, by Industry and Size... 8 Figure 1.8: Expected Average and Range of 2011 Merit Increases for Top Executives, by Number of Employees Figure 1.9: Actual Average and Range of 2010 Merit Increases for Top Executives, by Number of Employees Figure 1.10: Expected Average and Range of 2011 Merit Increases for Top Executives, by Industry Figure 1.11: Actual Average and Range of 2010 Merit Increases for Top Executives, by Industry Figure 1.12: Expected Average and Range of 2011 Merit Increases for Top Executives, by Region v

6 Compensation Planning Report 2011 Figure 1.13: Actual Average and Range of 2010 Merit Increases for Top Executives, by Number of Employees Figure 1.14: Percentage of Companies Offering Bonus or Other Incentive Pay in 2011 by Industry Figure 1.15: Projected Bonus or Incentive Pay Amounts for 2011 by Industry Figure 1.16: Percentage of Companies Offering Bonus or Other Incentive Pay in 2011 by Workforce Size Figure 1.17: Projected Bonus or Incentive Pay Amounts for 2011 by Workforce Size Figure 1.18: Percentage of Companies Offering Bonus or Other Incentive Pay in 2011 by Region Figure 1.19: Projected Bonus or Incentive Pay Amounts for 2011 by Region Figure 1.20: Will your company offer bonus or other incentive pay in 2011? By Number of Employees and Region Figure 1.21: Global Overview of Base Salary Increases Figure 1.22: Median Salary Budget Increases, by Employee Category Figure 1.23: Merit Increases Awarded, by Performance Category Figure 1.24: Median Salary Structure Increases, by Employee Category Figure 1.25: Average Base Pay Increases by Employee Group Figure 1.26: Median Short-Term Incentive Payouts Figure 1.27: Average Base Pay Increases by Select Industry Figure 1.28: Historical U.S. Salary Increases Figure 1.29: Are you planning on making changes to salary ranges? Figure 1.30: Are you planning on making changes to salary ranges? By Industry Figure 1.31: Projected Salary Change Percentages by Industry Figure 1.32: Are you planning on making changes to salary ranges? By Workforce Size Figure 1.33: Projected Salary Change Percentages by Number of Employees Figure 1.34: Are you planning on making changes to salary ranges? By Region vi

7 Figure 1.35: Projected Salary Change Percentages by Region Figure 1.36: Projected Salary Change Percentages by Workforce Size and Region Section II Figure 2.1: Did you company reduce planned increases for 2010 in response to economic changes? By Industry Figure 2.2: Percentage of Companies That Reduced Planned Increases for 2010 in Response to Economic Changes by Industry Figure 2.3: Percentage of Companies That Reduced Planned Increases for 2010 in Response to Economic Changes by Workforce Size Figure 2.4: Percentage of Companies That Reduced Planned Increases for 2010 in Response to Economic Changes by Region Figure 2.5: Were pay cuts or freezes enacted for all employees or only select employee groups? Figure 2.6: Were pay cuts or freezes enacted for all employees or only select employee groups? By Industry Figure 2.7: Were pay cuts or freezes enacted for all employees or only select employee groups? By Workforce Size Figure 2.8: Were pay cuts or freezes enacted for all employees or only select employee groups? By Region Figure 2.9: Company Response to the Poor Economy Figure 2.10: Categories in Which Companies Had the Most Success in Controlling Compensation Costs During the Past Year, by Industry Figure 2.11: What other steps, if any, were taken to adjust to the economic situation by Workforce Size Figure 2.12: What other steps, if any, were taken to adjust to the economic situation by Region Figure 2.13: Will you restore pay levels in 2011? Figure 2.14: Compensation Cost Control Measures Figure 2.15: Categories in Which Companies had the Most Success in Controlling Compensation Costs During the Past Year, by Industry Figure 2.16: Categories in Which Companies had the Most Success in Controlling Compensation Costs During the Past Year, by Workforce Size vii

8 Compensation Planning Report 2011 Figure 2.17: Categories in Which Companies had the Most Success in Controlling Compensation Costs During the Past Year, by Region Figure 2.18: Biggest Compensation Problem in the Last 18 Months Figure 2.19: Biggest Compensation Problem in the Last 18 Months by Industry Figure 2.20: Biggest Compensation Problem in the Last 18 Months by Workforce Size Figure 2.21: Biggest Compensation Problem in the Last 18 Months by Region Figure 2.22: Solutions to Compensation Problems Figure 2.23: Solutions to Compensation Problems by Industry Figure 2.24: Solutions to Compensation Problems by Workforce Size Figure 2.25: Solutions to Compensation Problems by Region Figure 2.26: Month That Merit Increase Budget Planning Decisions Are Made Figure 2.27: Month That Merit Increase Budget Planning Decisions Are Made by Industry Figure 2.28: Month That Merit Increase Budget Planning Decisions Are Made by Workforce Size Figure 2.29: Month That Merit Increase Budget Planning Decisions Are Made by Region Figure 2.30: Compensation Plans for the Next 12 Months Figure 2.31: Compensation Plans for the Next 12 Months by Industry Figure 2.32: Compensation Plans for the Next 12 Month by Workforce Size Figure 2.33: Compensation Plans for the Next 12 Months by Region Figure 2.34: Company Use of Data Sources to Assist with Compensation Planning Figure 2.35: Company Use of Data Sources to Assist with Compensation Planning by Industry Figure 2.36: Company Use of Data Sources to Assist with Compensation Planning by Workforce Size Figure 2.37: Company Use of Data Sources to Assist with Compensation Planning by Region viii

9 Figure 2.38: Who is involved in the planning process? By Industry Figure 2.39: Who is involved in the planning process? By Workforce Size Figure 2.40: Who is involved in the planning process? By Region Figure 2.41: Percentage of Firms Offering Severance Pay by Industry Figure 2.42: Percentage of Firms Offering Severance Pay by Workforce Size Figure 2.43: Percentage of Firms Offering Severance Pay by Region Figure 2.44: Size of Severance Pay Packages by Industry Figure 2.45: Size of Severance Pay Packages by Workforce Size Figure 2.46: Size of Severance Pay Packages by Region Figure 2.47: Percentage of Firms that Use HR Technology in Compensation Planning and Management by Industry Figure 2.48: Percentage of Firms that Use HR Technology in Compensation Planning and Management by Workforce Size Figure 2.49: Percentage of Firms that Use HR Technology in Compensation Planning and Management by Region Figure 2.50: Type of HR Technology Used, by Industry Figure 2.51: Type of HR Technology Used, by Workforce Size Figure 2.52: Type of HR Technology Used, by Region Figure 2.53: Percentage of Companies Using Software/Web Applications for Other HR Functions Figure 2.54: Percentage of Companies Using Software/Web Applications for Other HR Functions by Industry Figure 2.55: Percentage of Companies Using Software/Web Applications for Other HR Functions by Workforce Size Figure 2.56: Percentage of Companies Using Software/Web Applications for Other HR Functions by Region Figure 2.57: Do you think any gender-based pay gap exists within you company? Figure 2.58: Do you think a gender-based pay gap exists in other companies? Figure 2.59: Gender-based Pay Gap by Industry Figure 2.60: Gender-based Pay Gap by Workforce Size ix

10 Compensation Planning Report 2011 Figure 2.61: Gender-based Pay Gap by Region Figure 2.62: Has your company been affected by the Lilly Ledbetter Fair Pay Act or other pay equity laws? By Industry Figure 2.63: Perspectives on Executive Pay Figure 2.64: Top Five CEOs: Annualized Total Return on CEO Compensation Figure 2.65: Five Worst Performing CEOs: annualized Total Return on CEO Compensation Figure 2.66: CEO Compensation, By Industry Section III Figure 3.1: Is your company concerned about attracting and retaining employees? By Industry Figure 3.2: Is your company concerned about attracting and retaining employees? By Workforce Size Figure 3.3: Is your company concerned about attracting and retaining employees? By Region Figure 3.4: What measures has your firm taken to attract or retain? By Industry Figure 3.5: What measures has your firm taken to attract or retain? By Workforce Size Figure 3.6: What measures has your firm taken to attract or retain? By Region Figure 3.7: If you utilize bonuses to attract and/or retain, what bonus types do you use? x

11 s About the Authors Matthew R. Sottong Director of Surveys and Research Reports Mr. Sottong has been with BNA since He provided editorial direction and oversight of the project. Laime Vaitkus Editor Laime Vaitkus is the editor of IOMA s Report on Salary Surveys, a position she has held for 16 years. She is also involved in two of IOMA s top-selling reports, the annual Compensation Planning Guide, and the Guide to HR Benchmarks. Vaitkus is a regular contributor to the HR ezine, and arranges topics and speakers for IOMA s compensation webinars and live conferences. She researched and wrote the report. Laura Hagmann Editor Ms. Hagmann has been with BNA since 2010, and was responsible for copyediting the report. Cordelia Gaffney Graphics Director Ms. Gaffney designed the graphs and cover for this report. xi

12 Compensation Planning Report 2011 s About This Guide IOMA s Compensation Planning Report provides a comprehensive look at setting and managing merit pay increases, overall compensation strategy, and performance strategy. Anchored by data obtained through IOMA s Setting and Managing 2011 Compensation survey, the report synthesizes data from several merit pay budget forecast surveys and compensation studies to provide you with up-to-date and complete information to aid in your compensation planning activities. IOMA s Setting and Managing 2011 Compensation survey, sponsored annually by the Report on Salary Surveys newsletter, queried nearly 300 human resources professionals and others involved in compensation planning in organizations throughout the United States. This survey was conducted in June and July of The goal of the survey was to ascertain the 2011 planned and 2010 actual merit pay increases and bonuses for midlevel employees and executives, as well as salary range movements. The study also examines tried-and-true strategies for controlling compensation costs and reveals real-life examples of what techniques and tips actually help to save money. The survey takes a look at organizations top compensation-related concerns and what actions they took to resolve their most pressing issues. This study also investigated what steps organizations took to manage through the extended economic downturn, and how they are positioning themselves to respond to whatever the future may bring. The survey covers what salary information sources are most commonly referred to, the technology that companies use to plan compensation, who is involved in setting and planning compensation, when pay budgets are set, and views on gender pay gaps. The survey examines concerns about retaining key employees and attracting new job candidates and the steps companies are taking to achieve both. Pay for performance is a strong underlying theme in this year s survey, which is why a section on pay for performance strategies is included. Compensation is a major expense for any organization, but at the same time, it can be a vital tool to drive organizational change and create success. However, with budgets still strained, it can be beneficial for companies to find alternatives to the traditional annual raise. This guide endeavors to help organizations explore ways they can attract, retain, and engage employees while containing compensation costs. xii