September 2005

Survey: Pay increases to average 3.6% in 2006

Are you trying to decide how much your pay increases should be in 2006? According to the latest salary survey information released by Hewitt Associates, a human resources consulting firm, pay increases in 2006 are projected to remain about the same as they were in 2005 — about 3.5 percent.

Hewitt's survey of 1,056 large organizations reveals that salaried exempt and nonexempt employees can expect base salary increases of 3.6 percent next year —the same as 2005 increases.

The study shows that salaried-exempt workers in some major U.S. cities may realize salary increases somewhat higher than the national average projections for 2006. These include Los Angeles (4.3 percent), San Francisco (4.0 percent), Washington D.C. (3.9 percent), and Houston (3.9 percent).

While base salary increases remain stable, Hewitt's survey shows increased activity in the area of variable pay, as companies rely more on bonuses as a primary means of attracting, motivating and retaining key talent.

In 2005, actual company spending on variable pay as a percentage of payroll increased to 11.4 percent, up from 9.5 percent in 2004 and exceeding 2005 projections by 1.5 percentage points. Spending on variable pay in 2006 is projected to remain strong at 11.1 percent.

Variable pay has continued to grow in prevalence since the early 1990s, with 78 percent of responding companies currently offering at least one type of broad-based variable pay plan, compared with 51 percent in 1991.

According to Hewitt's survey, business incentives(3) are the most common award (64 percent), followed by special recognition awards (55 percent), individual performance awards (45 percent), and non-executive stock options/ownership (28 percent).

Source: Hewitt Associates, www.hewitt.com

Industry News from:
Chiropractic News from: