New Pay Adjustment Projections Line Up With 2012 Data

Based upon the results of the 2013 ERC Pay Adjustment & Incentive Practices Survey, many Northeast Ohio employers are approaching their compensation decision making plans from a very similar, if not slightly more fiscally conservative viewpoint as in 2012.

After hitting an average wage and salary increase projection of 3.0% in 2012, pay adjustment projections remain largely in line with this same number for 2013. However, within certain employee groups and breakout categories; most notably among executive employees, larger organizations with more than 200 employees, and non-profits; 2013’s projected increases dipped by as much as 0.3% from 2012’s projections. Conversely, smaller organizations with 1-50 employees and other non-manufacturing organizations saw the strongest increases, particularly among the exempt supervisory, management, and professional employee group.

In terms of the types of increases being provided, merit increases remain by far the most prevalent (although down several percentage points from its peak in 2012) with well over 80% or organizations using them for all employee types, except for the union production, maintenance, and service type positions. Interestingly, the other two types of pay adjustments surveyed, overall across the board adjustments and cost-of-living increases, both saw strong growth in popularity over 2012’s numbers. While still much less prevalent than the merit based increases, the revival of these blanket pay increases represents an apparent slowing of 2012’s strong trend towards pay for performance.

Outside of pay adjustments, changes to the bonuses and incentives offered also point to a somewhat less performance focused model than was seen in 2012. For example, approximately 10% fewer organizations indicating they have an incentive or bonus plan in place in 2013 than in 2012, although 65% of organizations still report offering their employees some type of incentive or bonus plan. Among this group, the data is largely consistent with 2012’s survey results. Annual bonuses, individual incentives, and profit-sharing remain the top three plan types, while items like stock options and gain sharing continue  to dwindle in popularity.