By BLR Founder and CEO Bob Brady
Last week, BLR CEO Bob Brady asked you to take a quick survey to confirm anecdotal evidence that organizations are ratcheting back on pay raises planned for 2009. You did—and did you ever.
The current economic turmoil appears to have claimed yet another victim—pay increases planned for 2009.
Based on conversations with fellow employers, it appears that pay budgets are being scaled back in response to the recent dramatic declines in the stock market. To verify this, we asked readers of this column to take a quick survey. Through Wednesday morning, 518 of you had responded, and we thank you for your input. (You can view the results by clicking the link below.)
The results are sobering. Our survey indicates that the average merit pay increase scheduled for next year is now 2.80%. That’s down almost 25% from the 3.71% increase employers reported when we conducted our comprehensive 2009 Pay Budget Survey in late June.
“We are just trying to keep the doors open,” said one respondent, summing up the sentiments of many.
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As recently as early October, some surveys indicated that planned pay increases were holding fairly steady. But that was before the Dow Jones Industrial Average plunged more than 2,272 points between October 1 and October 16.
Our survey, launched October 24, found that 38.5% of the respondents are changing their pay budget plans because of the economic situation, and another 32.5% said that changes are “under consideration.” Only 23.6% said they are not changing their pay budget plans.
And our findings jibe with the results of a recent survey conducted by Hewitt Associates. They found that 42% of the 411 companies they surveyed were revising their salary budgets downward, with an average decrease of 1%. That brought their projected pay raises for next year down to 3.1%—the lowest seen since 9/11.
Of the changes being planned by respondents to our survey, reducing the pay budget topped the list (37.3%), followed by smaller (or no) increases in an organization’s rate ranges (34.4%), a freeze on all raises (24.4%), and delaying the effective date of raises (15.3%).
Most of the 518 respondents (72.1%) were with for-profit organizations, 19.4% were with not-for-profit organizations, and 8.5% were with government agencies. The largest single segment (36.3%) were with organizations of 100–499 employees, followed by organizations of fewer than 50 employees (21.8%), over 1,000 employees (18%), 50–99 employees (16.6%), and 500–1,000 (7.3%).
The survey indicated that merit raises will be highest in larger organizations, while higher cost-of-living increases are planned by smaller organizations:
The planned merit raises are slightly higher at for-profit organizations, while cost-of-living increases are higher at not-for-profit organizations:
‘We are hurting …’
The pain and concern caused by the slumping economy was evident in many of the comments accompanying your survey responses.
“We have had to suffer through losing 33% of our staff this year,” said a respondent whose organization is planning a 2% merit increase. “We look to reduce it by another 5% by the end of the year. We are hurting …”
Others clearly seem to be waiting for the other shoe to drop. “We will continue to monitor income and will adjust increases (lower percentage of increases given or freeze increases) and other spending should income decrease dramatically.”
“We were just discussing this issue about 1 hour before I received your E-opinion. Great timing,” one reader said. “I’m curious to see what other companies are doing.”
“Our employees know that nothing may happen [in terms of pay raises] if the economy continues to move down and [they] appear to understand—several said they are just glad to have a job and are willing to ride it out,” said another.
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“We are an outsourcer in the homebuilding business and need every penny to survive,” a reader wrote. “We are not only freezing increases, but we are cutting back hours for people.”
I feel your pain, and I truly appreciate your input. To see the full survey results, click the link below (to see individual merit and cost-of-living increase responses, as well as respondents’ comments, click the “View” button next to those questions).
Poll Results
If you can’t click the link above, copy and paste this URL into your Web browser’s address bar: http://www.surveymonkey.com/sr.aspx?sm=nK83H0D5vOKOAoXcIxA6zR4uyGWbnomq0l2X_2bfjz0Fk_3d
Increase, What increase? I’m the sole HR person for TWO yes two companies that are family owned with a staff of 146. on 1 shift. We were working 4 shifts until the s***t hit the fan. I haven’t had a raise in over 3 years and I’ve been here since 1992. My last raise was .25 per hour. Yeah I’m hourly not salaried. Oh by the way did I tell you I’m also Director of Safety & Health and Administrator of the company Health Insurance plan, plus the company 401K administrator. I’m also an EMT and take care of minor injuries that occur on the job. I get an UNPAID 30 min. lunch break too!!!! So don’t complain about 3% raises. I’m 60 years old, 6 years away from retirement, paying a 2nd mortgage so my son wouldn’t lose his medical practice after a nasty divorce and you’re bitching about a 3% increase? You should be so lucky!!!!! Take my job.