2013 to see Modest Salary Increases, Focused on High-Impact Employees

In an online poll conducted by compensation consultants Pearl Meyer Partners in partnership with WorldatWork, most employers reported predicting conservative budgets for pay raises in 2013 aimed strategically at employees’ most affecting organizational performance. The poll, Doing More with Less: Maximizing Limited Compensation Resources in 2013 , surveyed 150 compensation and HR professionals in November. Nearly 75 percent of respondents predicted no change for their company’s 2013 salary-increase budget, and the remaining 25 percent were split between higher and lower budget projections.

“Given the tepid economic recovery and a threatened fiscal cliff, the ‘new normal’ appears to be very modest salary increase budgets, more use of variable pay, and compensation dollars focused on key roles, functions and high performers,” Jim Hudner, managing director of Pearl Meyer Partners, said.

“Overall average salary budget increases in the U.S. seem to be holding steady at close to 3 percent,” Kerry Chou, CCP, a senior practice leader at WorldatWork, said. “We anticipate much of the same in the near term until the economy generates more confidence.”

Further findings found that 65 percent of respondents differentiate competitive pay positioning among employee populations, rising from about 50 percent who reported doing so in 2011. Additionally, about 20 percent of survey participants expect to expand eligibility, increase award levels, or both for performance-based incentive programs. Hudner commented, “Targeting more aggressive competitive levels of pay for critical functions and roles is another way to help maximize limited compensation dollars.”