Support through your toughest HR challenges: A network of 285,000 HR professionals.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Given the uncertain economic outlook and the stubborn unemployment rate, American workers can expect pay raises averaging only 2.8 percent in 2012 vs. 2.7 percent in 2011 and 2.9 percent in 2010, according to a survey by Buck Consultants, Compensation Planning for 2012. The firm's 2012 base pay forecast is in line with other recent projections (see box at the end of this article).
Average executive promotion increases are expected to range from 5.7 percent (for C-suite employees) to 7.3 percent (for the vice-president level), the consultancy found.
Despite high unemployment, individuals with specific skill sets and expertise are still likely to be recruited for positions, and the regulatory environment has increased the need for skills in the information technology, accounting and health care fields, according to the firm's analysis.
“Most employers plan to hold the line similar to 2011,” said Stephen Mork, a Buck Consultants principal. “Given the slow economic recovery and stubborn unemployment rate, organizations are taking a cautious and conservative approach to compensation planning to stay within their payroll budgets.”
Buck Consultants completed its survey in August 2011, with responses from employers across all sectors of the U.S. economy.
The most prevalent type of short-term incentive pay was a companywide plan with an individual performance component. These bonuses are relatively unchanged from the previous year.
A blend of stock options and full-value awards (time- and performance-based restricted stocks) remains the most prevalent long-term incentive approach for C-suite employees. Broad-based employee groups are most likely to participate in time-based restricted stock plans.
Paying for Performance and Retaining Talent
Organizations’ top talent-related priorities for 2012 are retention of talent (62 percent) and employee engagement (56 percent), the survey revealed. Moreover, pay for performance remains as crucial as ever, given the importance of allocating budgets effectively to retain top performers: 80 percent of organizations had a pay-for-performance philosophy.
Popular actions for retaining top performers included:
• New career development opportunities (64 percent).• Market pay adjustments(43 percent).• Larger-than-average base pay increases(30 percent).• Increased noncash recognition (28 percent).• Larger bonus opportunities than before (21 percent).
• New career development opportunities (64 percent).
• Market pay adjustments(43 percent).
• Larger-than-average base pay increases(30 percent).
• Increased noncash recognition (28 percent).
• Larger bonus opportunities than before (21 percent).
Among additional survey highlights:
•Pay increase budgetsare communicated to managers and employees by 73 percent of organizations.• Referral bonusesare offered by 56 percent of organizations. More than three-quarters (77 percent) of employers who provide these bonuses cite a better chance of getting a strong performer.• A hiring or retention bonusis offered to employees with specialized industry or product knowledge by 52 percent of organizations.
•Pay increase budgetsare communicated to managers and employees by 73 percent of organizations.
• Referral bonusesare offered by 56 percent of organizations. More than three-quarters (77 percent) of employers who provide these bonuses cite a better chance of getting a strong performer.
• A hiring or retention bonusis offered to employees with specialized industry or product knowledge by 52 percent of organizations.
Other 2012 Salary Forecasts
Salaries for American workers will increase by a median of just 2.8 percent in 2012, up slightly from 2.6 percent in 2011 and 2010, according to research by Towers Watson Data Services (see "For 2012, Modest Salary Increases with Regional Variations" and "Moderated Pay Raises Foreseen, with Fully Funded Annual Bonuses").
A 2.9 percent base salary increase was projected for 2012 by Aon Hewitt for salaried exempt, executives, salaried nonexempt and nonunion hourly workers, up slightly from 2011 for all groups (see "Salary Increases Stay Consistent, Focus on Variable Pay").
A Mercer survey indicated that 97 percent of U.S. organizations were planning to award base pay increases in 2012, with an expected average increase of 3.0 percent, up slightly from 2.9 percent in 2011 and 2.7 percent in 2010 (see "2012 Compensation Budgets Remain Lean, with Focus on Top Performers").
Hay Group reported that U.S. employees could expect median pay increases of 3.0 percent in 2012, consistent with salary increases the firm found for 2011 but below the 4.0 percent increases seen from 2005 to 2008 (see "Forecasted 2012 U.S. Base Salary Increases Remain Steady").
WorldatWork projected that salary budgets will rise by 2.9 percent in 2012 and that, based on individual performance ratings at year-end 2011, high performers can expect an average pay increase of 4.0 percent, middle performers a pay increase of 2.7 percent, and low performers an increase of 0.7 percent (See "More Employees to Get Raises as Pay Freeze Thaws" and "Salary Budgets Lag Behind U.S. Rate of Inflation").
Base salary increases in the U.S. are projected to rise from 2.92 percent in 2011 to 3.01 percent in 2012, with most companies budgeting 3.0 percent, according to pay consultancy Culpepper and Associates, Inc. (see "Global Rise in Salary Increase Budgets Projected in 2012").
Average 2012 raises for U.S. white collar professionals were pegged at 3.4 percent by recruitment firm Robert Half International (see the SHRM Online article "Forecast: Tech Positions to See Highest 2012 Pay Gains").
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Talent Attraction Study: What Matters to the Modern Candidate
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies