Source: WorldatWork

Feb. 3, 2009 — A WorldatWork survey of more than 1,000 U.S. companies asked if employers plan to change their salary budget projections in light of the current economy. Results from the WorldatWork Special Update: 2008-09 Salary Budget Survey, the largest survey of its kind, found that across all employee categories, industries and regions, employers plan to lower their 2009 salary budget increase projections by 0.8 percentage points. This means average salary budget increases this year will be 3.1% compared to 3.9% when data was first collected in April 2008. Depending on where they work, 77% of the workforce can still expect to receive base pay raises. Major metro areas with the largest projected salary budget increases of 3.1% are: Philadelphia, Pittsburgh, San Francisco and Washington, D.C. (See table)

The data for the WorldatWork Special Update was taken and compiled in early December 2008, after the credit markets tightened and after the presidential election so that companies had as many of the variables needed to re-assess compensation plans for 2009.

“There is a silver lining in this dark economic cloud,” said Anne C. Ruddy, CCP, president of WorldatWork. “Employers are committed to rewarding employees; our data shows 77% of employees can expect a pay raise, especially high performers.”

When it comes to increases for officers and executives, nearly 17% of respondents reported zero salary budget increases in December 2008 compared to 3% in April 2008.
 
“This sends an important signal to employees that leaders are doing their part and sharing the pain brought on by these difficult times,” Ruddy said.

Key Findings

• Across all employee categories, industries and regions, survey participants reported lower 2009 salary budget increase projections by 0.8% since April, taking the overall average from 3.9% to 3.1% nationwide.
• Half of participating organizations (51%) made changes to their 2009 projected salary budget increases, with more than 90% of those making changes lowering their salary budget increases by an average of 1.6%.
• For exempt salaried employees, 10% of participating organizations will be freezing pay in 2009.
• For organizations reducing salary budget increases, 19% to 33% are cutting salary increase budgets to zero.
• Fifty-one percent of all respondents characterized their organization’s 2008 year-to-date (YTD) financial performance as worse than 2007 with only one-quarter saying their organization was performing better than the year before.
• More than half of the organizations minimizing their 2009 salary increase budgets cited a recent and/or anticipated decline in business as the reason for change.

Total Salary Budget Increases, by Major Metropolitan Area

Survey Methodology
Survey data was collected in December 2008 with a 3% margin of error. Survey respondents are WorldatWork members employed in the human resources, compensation and benefits departments of mostly large North American companies. Surveys were electronically sent to 2,254 WorldatWork members who participated in the 2008-09 Salary Budget Survey on behalf of organizations with operations in the United States. Of this population, 1,169 responses were received — a 52-percent response rate. Submissions from organizations with fewer than 10 employees and duplicate submissions were deleted from the data set. The final data contains 1,033 responses analyzed by statistical software. 

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