What We Hear on the Street: More information is becoming available on projected salary trends for 2010

June 2009 E-NotesIn our June E-Notes we provided preliminary information from national sources regarding 2009 actual and 2010 projected salary increases. This was combined with some original proxy analysis we conducted in May. Additional information and forecasts for 2010 are now coming available.

Culpeppertm is a well-established US consulting firm that conducted a survey this summer of salary practices for 835 organizations across 73 countries. Roughly 50% of the participants in the survey were technology companies and the rest were from a broad group of industries. The median-sized company was in the range of 500 to 2,500 employees. Twelve percent (12%) of participants were over 10,000 employees in size. Public and private companies each represented roughly 45% of participants. The remainder were non-profit or government. Results are reported for several worldwide markets. Positions represented were both executive and non-executive. Incentive or bonus practices were not included in the survey.

The following table shows salary findings from the Culpeppertm survey. Also, we have compared these data with that reported in our June E-Notes.
  What We Hear on the Street: More information is becoming available on projected salary trends for 2010There appears to be a developing consensus for companies to budget salary increases at or around 3.0% for 2010 or slightly higher. That is an interesting result considering bleak forecasts being made only six months ago. Looking forward, the real question may be: will companies use their budgets in a customary across-the-board 3% manner—everybody gets 2.5 to 3.5%? Or, will they grant real 5-6% raises to the high-performance and high potential employees? Winning companies will.

As you may also recall, we suggested in earlier E-Notes that companies must face the reality that they will need to continue to pay key (and surviving) employees competitively. While we never described pay freezes and cuts as “suicidal,” it may not be a bad description for the practice. It also seems that that David Leonhardt of The New York Times believes that is why pay trends during the last year have not dropped like “many” had predicted. Read his comments on salaries practices and other pay and reward matters in his article of September 15th, 2009. [Wages Grow for Those with Jobs, New Figures Show]

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