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Show Me the Money
Salaries have begun to thaw from 2009's deep freeze, and experts see pay climbing ever so slightly in the coming months. But with such futile gains for workers, how can HR keep its talent happy? Enhancing communication efforts is a good start, experts say.
While businesses slowly climb out of the recession, their workers -- who may have been happy to have a job in 2009 -- are now re-focused on their paychecks, and many even have one eye on the job market. Fortunately for workers, the majority of companies are reversing pay freezes and salary cuts, and paychecks will be rising in 2010 -- although ever so slightly, according to several surveys. In separate studies, WorldatWork and Towers Watson both found that 54 percent of organizations that froze pay in 2009 are planning to resume normal pay activities this year. The Hay Group sees an even more positive year for workers, finding that 75 percent will unfreeze salaries. While pay cuts made plenty of headlines in 2009, just 13 percent of companies actually implemented them, according to WorldatWork. Those businesses still seem to be in the throes of financial trouble though, as just 29 percent of them plan to restore pay in full in 2010. So what kind of pay increase will workers see in 2010? A modest one, that's for sure. Mercer reports an average pay increase of 2.7 percent, while WorldatWork and the Hay Group each report a 2.5 percent increase in separate studies. Those numbers are lower than the 3.2 percent Mercer reported last year and the 3.5 percent boost in salaries it saw from 2002 to 2008, says Loree Griffith, a principal with Mercer's rewards consulting business in New York. The smaller salary increase for 2010 is not an indication that the economy is getting worse, says Griffith; it's just a product of the sheer amount of companies unfreezing salaries -- but doing so cautiously. Workers might not be satisfied with such a small increase though -- especially after 2009 when they may not have gotten one at all. "This may get people to start looking around [for new jobs] more actively," says Mel Stark, vice president and Northeast regional reward practice leader at The Hay Group's metro New York office. To increase morale and keep their talent in-house, companies and their HR departments are taking a number of different steps, according to WorldatWork. It found that 33 percent of employers are providing or enhancing career-development opportunities, 28 percent are offering non-cash rewards and recognition, 21 percent are giving leadership training and 20 percent are allowing flexible hours.
"Now, as we are hopefully moving more toward recovery, raises are back -- although lower than they were in the past -- but companies are feeling like it's more than just about the salaries," says Mercer's Griffith. "There are other things that add to the employment experience and companies are trying to find ways to highlight them." Alison Avalos, a research manager based at WorldatWork's headquarters in Scottsdale, Ariz., says HR needs to "make sure communications are clear and employees understand where the employer is [financially] and why they are making the decisions." Another tool in HR's arsenal, says Griffith, is to communicate the value of the entire compensation package, showing the value of benefits, retirement and paid time off -- not just the salary. "While the message is a little mixed, 'Yeah we're going to give you a raise but it's going to be lower than you got last year -- or maybe lower than you've ever got in the past 10 years' -- I think a lot of companies are trying to couch that in a total-rewards view that says, 'Look, you're also getting these elements of the total package. And when you put it all together you might not be as bad off as you're feeling,' " she says. HR departments should also find out which parts of the employment deal are most desired: Higher salary? Better benefits? More paid time off? "We're seeing a lot of companies invest in research around that to better shape programs going forward and tailor those programs to be designed in a way that matters to employees," she says. Avalos says that, these days, more and more companies are moving toward a pay-for-performance model. "The good news [is] that employees have some control over that," she says. "They can really position themselves for those higher pay increases." Stark says that HR cannot do it alone -- they need the help of line managers. "They are the ones that need to be doing the organization's bidding," he says. "They are the people our research shows employees trust the most." Stark says that companies can fall short of their communication goals if they just try one medium and aren't all that proactive about it. "Just because you post something on your intranet," he says, "doesn't mean that people are going there to read it."
February 9, 2010 Copyright 2010© LRP Publications |
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