With the start of the New Year,
employers will be finalizing their salary budgets for 2009. Many survey
vendors collected, compiled and analyzed data regarding merit increases
for 2009 and reported that merit budgets for 2009 were on track to
remain consistent with previous years' averaging at around the 3.5%
As more economic turmoil surfaced toward year end, some
organizations took a new look at merit budget plans for 2009 as we
discussed in the article Pay Increases in 2009 May
Disappoint Workers in our December 30th newsletter. Most
employers are being cautious, preparing for long-term economic
difficulty and keeping their options open for 2009.
does this mean for employees?
Not all companies will respond the same way
Not every employer
will select the same course of action in light of the current economic
situation. In fact some companies may decide to not decrease their merit
budgets at all.
Employers who do reduce their merit budgets may choose to give small,
across the board increases in an attempt to be "fair" or they may choose
to significantly reward only the top performers while giving good or
average performers a small increase or no increase at all. Some
employers may push out or delay increases until later in the year and
some may impose a salary freeze.
It is reasonable, however, for you to ask your manager how your company
plans to handle merit increases in the coming year and have an open
dialogue about what to expect in the coming months.
Increased focus on performance
Employers will need to get more from every merit dollar spent and make sure that top performers are adequately rewarded. They will need to differentiate more between levels of performance when considering performance-based merit increases and be able to explain these decisions come review time. It is likely that good performers may get less of an increase than expected so that the top performers can be appropriately rewarded. Good performers near the top of their salary range may see no increase at all.
This all means that it is important for you to discuss expectations for the coming year with your manager to make sure that you both know what your goals are for the coming year and how your achievement of those goals will be measured and assessed. Find out where your salary falls in your current pay range and ask how that affects the amount of increase you may be eligible to receive. For more tips on salary negotiation read our article Get the Raise You Want.
Pay isn’t the only reward
Most employers know
that pay increases alone won’t work as a way to attract and retain
employees. In fact, the current economic situation presents employers
with an opportunity to institute more creative ways of rewarding
individuals and letting them know that their contributions are
Employers will more likely need to consider alternative rewards such as
employee development, training, additional vacation time and work-life
balance options such as telecommuting and compressed work weeks as
additional features to their rewards program in order to attract, retain
and reward key employees
If increases are expected to be small or not occur at all, consider
proposing some non-monetary rewards that would help soften the blow. For
more tips on how to approach this, read our article 6 Tips to Successful Benefits Negotiation.
Less is more
Small increases, no
increases or pay freezes are not meant to de-motivate employees. In
tough economic times, it is often a necessary evil to ensure economic
stability and longevity for the enterprise and limit the need for
layoffs. Remember that sacrifices made now, may help the enterprise as a
whole survive difficult financial times and help to ensure that you
remain gainfully employed.
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