Salary Increases Low; High Performers Are the Focus

Hewitt’s latest survey shows some employers will be giving salary increases of about one percent smaller than they would have, had the economy been looking a little better.

Hewitt’s survey of 411 large companies revealed that 42 percent of companies “are revising their salary budgets and variable pay spending strategies related to the economic downturn or because of increasing cost pressures.” Of that 42%:

  • 49 percent plan to reduce variable compensation payouts
  • 66 percent will cut bonuses by more than 10 percent in 2008
  • Salary increases will be about 3.1 percent in 2009, or about 1 percent smaller than they would have been.

Thirty-eight percent of companies are reserving part of their salary-increase budget for their highest performers. And 23 percent are creating supplemental, discretionary incentive pools for high-performers. Another 20 percent are offering employees retention bonuses for them to stay a certain amount of time.

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