It’s Salary Planning Time Again…

It's Salary Planning Time Again...

In October, most companies begin to plan and budget for the coming year. Two questions are always asked:

  • How large should salary-raise budgets be for the coming year? and
  • How much should salary ranges increase this year?

To help answer these questions, I asked two colleagues who are experts in this area—Andy Mosko and John Larkin—their forecasts for 2011. Additionally, we collectively reviewed reliable published sources of market information for guidance. These forecasts follow.

Salary-raise budgets—After a couple of years of salary-raise budgets of 2.5 to 2.7% (or less); it appears that most sources now forecast pushing or reaching 3.0% for 2011. Remember this is a budget, and some raises will be higher and others lower based upon merit-increase criteria. Further, we are not seeing historically forecast salary-raise premiums for executives when compared to other employee groups. We have not seen budgets in the 3’s since 2007-8.

Salary range (market job rate) increases—Salary ranges typically increase at a rate slower than that of salary-raise budgets. Again, after slow progression in grade increases for 2009-10, it is forecast that structures will increase 2.0-2.2% in 2011. It should also be noted that executive positions were particularly hard hit during 2009-10 and small salary-range increases were seen. In 2011, executive salary ranges are forecast to increase at the same rate as other jobs.

As noted, the last two years have generally been quite disruptive and negative—both pay structures and physical employee salaries have been held back. As you go into 2011, we suggest that you take the time to insure that your pay practices and salary ranges remain competitive with the marketplace.  Our advice: take 12 key jobs and compare both salary ranges and actual salaries to valid and appropriate market practices (no internet surveys, please). It is a bit like testing a convertible top for leaks after the big storm.

Make sure you have no leaks as you begin to plan for 2011!

Share this!