CFO: ‘Pay Freezes Are Melting’
Good industry trend news from CFO.com:
If your employees’ salaries are still frozen or reduced from where they were in the premeltdown days, your company is behind the times.
A noticeable thawing is in progress, according to new research from Towers Watson. Among 381 U.S. organizations that were surveyed, only 9% have frozen salaries for management, professional/technical, and administrative employee groups in 2011. That compares with 17% to
20% in 2010.For executives, salary budgets are frozen at 13% of survey participants, less than half as many as last year. Even hourly workers are doing better, with 12% of the organizations freezing their pay, compared with 20% in 2010.
Not only are salary freezes melting, but merit raises are making a comeback. On average those polled have budgeted 3% base salary hikes for every employee category, the most in three years.
Interestingly enough, the reversal of pay freezes and introduction of pay hikes isn’t focused on retention; it has its sights set on recruiting.
The motivation for the strategy shifts is not so much employee retention as employee recruiting, says Laury Sejen, global practice leader, rewards, for Towers Watson. In 2008 and 2009, few companies had trouble attracting any type of employee. Now 54% report issues with finding enough people with critical skills, and 37% are encountering the same with finding both high performers and those with high potential. “There’s a sense now that you have to be broadly competitive on base salary levels because the market has started to move again,” says Sejen.
No question the market is changing. Where is your organization along the recovery curve? Are you witnessing the same phenomena that’s being reported by Towers Watson?
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