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  The Top 10 Salary Trends for 2006

The Top 10 Salary Trends For 2006
2006 may be the best time for you to negotiate a pay raise, a bigger bonus, or even a flexible work schedule.

From the compensation experts at Salary.com

If your New Year's Resolution
has something to do with earning more money this year, the 2006 salary forecast from Salary.com shows that you may be in luck. In fact, 2006 may be the best time for you to negotiate a pay raise, a bigger bonus, or even a flexible work schedule. A growing job market in the new year is the main reason that salary negotiating power will shift to the employee this year. The primary employer goal of 2006 will be to bolster employee retention, as a strengthening economy will have more employees looking for new jobs. Companies will therefore focus in 2006 on offering their employees more incentives based on performance, as well as earlier bonuses and salary increases. This means that the new year is looking quite promising for the majority of employees who are looking to negotiate their salaries and earn more.

See below for the Top 10 Salary Trends For 2006 and how you can use these trends to make more money this year. Also use The Personal Salary Report negotiation tool in order to better your chances of boosting your pay in 2006.


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1. Human Resources departments will continue to move towards pay for performance, with a greater emphasis on incentives.

Base pay increases will maintain at a moderate 3-4% per year, but more employees will have the opportunity to earn more in variable pay incentive programs. This opens the door for employees of all experience levels to set measurable performance goals with their managers, and be rewarded when they meet or exceed those goals. Just as a Major League pitcher will negotiate a clause into his contract saying that he will be paid more for exceeding a set performance level, a regular rank-and-file employee can convince his/her employer to pay rewards if they manage to perform at a preset level.

2. Employers will expand their use of work-from-home programs for employees.

Family situations, high gas prices, and travel concerns are combining to make working from home attractive to more and more employees. The fact is that technology is also making working from home feasible for employers. If a work-from-home program or flexible workweek makes life easier for a particular employee, the employer may be willing to grant this employee his/her wish. The employer will then be able to retain an employee who is thinking of getting a job closer to home in order to save gas money, or is thinking of quitting to become a stay-at-home parent because of high childcare costs.


3. Managers will increase the use of spot bonuses to provide immediate positive feedback to key contributors.

Spot bonuses strengthen the connection between pay and performance (i.e., behavior and reward). They can also be a cost-effective feedback mechanism. Even a small reward can motivate employees and keep them satisfied, which goes a long way towards the primary employer goal of 2006- to retain employees. Employees may also see more team spot bonuses this year. One way to improve your chances of receiving a spot bonus this year is to simply ask your manager if he/she will offer a spot bonus upon completion of a difficult or stretch goal.

4. Employees could start seeing their bonus payments and salary increases sooner than in years past.

New technology will help employers to be more efficient with their performance and salary review processes this year. Employees will be reviewed more quickly and will receive their rewards earlier. For instance, if your fiscal year ends March 31st, you could see your bonus in your next paycheck, instead of potentially waiting months for all the administrative work of performance and salary reviews to be completed.


5. Workers may see an increase in pay for jobs with increased visibility and increased demand.

Jobs that will be in high demand in 2006 include ethics and corporate governance jobs, control and accounting professionals, and data and technology security jobs. If you happen to do one of these high profile jobs, you will be of great value to your company and can potentially negotiate a higher salary, more incentives, or a bigger bonus in 2006. Employers will take measures to retain these professionals.

6. Retraining will become a challenge for employers and employees.

A major factor in keeping employees motivated and satisfied is giving them the opportunity to develop professionally and climb up their career ladder. Companies will offer more adult education, corporate training programs, and online educational opportunities in 2006 in order to give their employees the resources they need to make personal progress. More qualified employees will also help the bottom line. Educational advancement programs and tuition reimbursements can also be negotiated in order to help you save money on the rising cost of education.


7. Employers will find creative ways to attract and retain older workers.

Employers are looking to increase their workforce in 2006 and they fear younger employees will be the ones who are most likely to "job hop" for better salaries or better jobs. Older workers are more likely to stay and therefore could provide stability. Employers will be looking for creative ways to retain these older workers.

8. Companies and their boards will be looking to re-evaluate, cut back, or eliminate components of their executive pay programs.

Some employers may eliminate executive severance packages (otherwise knows as golden parachutes), cut back on executive perks, and reevaluate SERPs (Supplemental Executive Retirement Plans). This means that there may be more funds available for spot bonuses, pay for performance incentive plans, and merit salary increases for the regular rank-and-file employee.


9. The use of signing bonuses will return in moderation.

Recruiting and competing for talent in 2006 will bring back signing bonuses. Employees who are in high demand may even have the ability to request or negotiate a signing bonus during the interview process. Employers will be more cautious with the frequency and magnitude of signing bonuses than they have been in the past, but keep in mind that this is yet another piece of your total rewards package that may be negotiable in the new year.

10. Stock option usage will continue to slow.

In 2006, companies will move from issuing stock options to providing employees with one-time grants, restricted stock, or cash. This is due to recent FASB (Financial Accounting Standards Board) regulations, which now require companies to expense stock options. While stock options are an effective motivating tool, and have been used widely in technology companies and startups, employers will look to replace them with other motivating tools, such as cold, hard cash.

About Salary.com

Salary.com is the leading provider of compensation-related data, applications, and services to enterprises, small businesses, and individuals. Salary.com's products shape, influence, and facilitate millions of pay-related decisions each year. Salary.com's enterprise software helps companies manage their compensation expenditures with real-time, decision-ready data and analytical tools. Backed by a team of Certified Compensation Professionals, Salary.com is your partner in compensation.

- By: Dan Malachowski, Salary.com


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