|Historical U.S. Salary Increases|
Variable Pay Expected to Rebound in 2011Like salary increases, spending on variable pay—or performance-based awards that must be re-earned each year—was also lower than expected in 2010 due in large part to lackluster company performance. In 2010, spending on variable pay as a percentage of payroll for salaried exempt workers was 11.3 percent, down from a record high of 12.0 percent in 2009. Spending in 2011 is expected to creep upward to 11.8 percent—which would be the second highest increase since Hewitt began tracking the data in 1976. Hewitt’s survey also shows employers are—by and large—depending on company performance to budget for variable pay, though some are looking at additional funding sources. About three quarters (76 percent) are budgeting for spending on variable pay through improved company performance, while 12 percent are doing so through reduced merit increases and 10 percent by reductions in head count. Just 5 percent of companies are budgeting for variable pay through reduced spending on benefits, while 4 percent are doing so through pay freezes. “Rising spending on variable pay indicates a shift in overall pay philosophies,” explained Abosch. ”Rather than rewarding employees for years of service, employers are tying a greater percentage of workers’ pay to their individual performance and the overall performance of the company. Structuring compensation programs this way gives organizations greater freedom to adjust budgets based on the economy and their performance, rather than being locked into the fixed costs associated with increasing base pay.” 2011 Salary Increases by Industry and City According to Hewitt’s survey, workers in some U.S. cities can expect to see salary increases higher than the national average in 2011. These cities include Washington, DC (3.4 percent), Houston (3.3 percent) and Pittsburgh (3.2 percent). Cities that can expect lower-than-average increases in 2011 include Philadelphia (2.5 percent), and Atlanta and Los Angeles (2.6 percent each).
The industries that can expect to see the highest salary increases in 2011 include accounting/consulting/legal (3.3 percent); and energy, aerospace, pharmaceuticals, construction/engineering and real estate (3.2 percent each). The lowest increases are projected to be in education (2.3 percent), metals fabrication (2.6 percent), and automotive and forest/paper products (2.7 percent each).About Hewitt Associates Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit www.hewitt.com. Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6410939&lang=en