Creative Salary Increases

A recent blog post by author Tom McMullen provides some recent research from Hay Group. According to the research from more than 300 organizations across all industry sectors, planned 2011 base salary increases are at a median of 3 percent. Talent’s blog, Talent Management Perspectives, offers a look into past, present, and future base salary trends.

McMullen writes that the past three years have seen the lowest base salary increases since the beginning of the decade. Planned increases for 2011 are slightly higher versus last year and are consistent across executive, middle management, supervisory, and clerical positions and relatively consistent across most industry sectors.

Organizations are emerging from the recession leaner and focused on activities that offer the greatest returns; in other words, they’re working to ensure they don’t waste the opportunity a recession gives them to make needed changes. Difficult choices are being made as available money has to be earned via performance and allocated to those areas and people most critical to business success.

Increased labor productivity and performance will be an essential driving force of profit growth going forward. However, the goal is clearly still the bottom line. Talent managers take note: the performance-oriented, post-recession world in which organizations are operating has significant implications.

A relentless focus on performance is becoming a new trend as organizations try to reverse some of the lax performance management practices of years past. Many organizations are emphasizing total rewards programs to engage employees.

While there is not a significant change in pay increases for the coming year, the mix of that pay is changing. As organizations emerge from the recession, they are shifting more of their focus from fixed compensation to variable pay. Variable pay has proven to be an effective lever for motivating performance and reinforcing the focus of employees with the organization’s goals and priorities.

Many organizations are striving to align their reward, performance, and business strategies. This means ensuring that the right measurements are used and that reward programs are closely tied to those measurements. Nonetheless, while base salaries increases are not as strong as they were at the beginning of the decade, the opportunity for talent managers to creatively motivate and retain employees is presenting itself in bountiful abundance. To read more, click here.

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