Career Report
September, 2007 — Issue 91


President,  Berman Larson Kane
President, Berman Larson Kane

Employers to Hold Line on Raises in ’08

Workers hoping for big raises next year are in for a disappointment, USA Today reports. That’s because employers are expected to hold the line on pay increases, following a trend of reining in compensation costs to stay competitive.

Employers are planning an overall salary budget increase of 3.9 percent next year, according an August survey by WorldatWork, an association of human resource professionals that conducts one of the most comprehensive salary budget surveys. This follows similar modest salary increases of 3.9 percent in 2007.

The pay raises modestly outpace consumer inflation, which was 2.7 percent for the 12 months ending in June.

The restrained pay increase poses a challenge for employers who must find other ways to retain and recruit employees, and it’s a shift from the early to mid-1990’s, when raises were around 5 percent.

“For people who are doing adjustable-rate mortgages and stretched-out credit cards, this is not good news,” Anne Ruddy, president of WorldatWork, told the newspaper. “And on top of it, employees’ health care costs have also gone up. Companies are responding to globalization and shareholder pressure.”

But while employers are holding the line on raises, they are being more generous when it comes to bonuses for high performers, the article pointed out. In the 1990s, employers budgeted only about 5 percent of their payroll for bonuses. For 2008, companies anticipate devoting nearly 12 percent of payroll to bonuses – using pay as a way to retain and reward valued employees.

“The bonuses surprised us,” said Ken Abosch, North American compensation practice leader at Hewitt Associates, a benefits consulting firm in Lincolnshire, Ill., which issued a recent report on worker compensation that supports the WorldatWork survey results. “With base salaries flat, companies have turned to bonuses to reinforce employee performance. It’s the biggest turnaround in compensation practices in 10 years.”

Who’s getting the heftier bonuses? Employees who set specific work goals with their managers, ask for feedback from superiors and document their contributions, reflecting a growing need for employees to market themselves to their employers, Abosch said.

About 90 percent of companies have adopted variable pay programs, which base compensation on specific employee performance, the article noted. For employers, variable pay, such as bonuses, doesn’t add to their fixed compensation costs but can be a powerful tool for motivating workers.

Companies struggling to retain workers despite modest pay increases are taking other approaches, too, such as offering tuition refunds for continuing education.


News from BLK

Since September is the traditional back-to-school month, several BLK employees have enrolled in the NJSA/NAPS Immersion Class and Test being held in October. This on-site, one-stop training and testing program is designed to help staffing industry professionals achieve CPC and/or CTS certification in a highly efficient manner. These certifications indicate that our staff members are educated in and guided by legal principles and the highest ethical standards.

Our newly certified staff members will have the additional advantage of working with our upgraded website, due to be launched in the next few weeks. This interactive and cutting-edge website will help ensure that we continue to offer our valued clients and candidates the “best staffing options.”