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June 4, 2010

HR Fact Friday: Pay Incentives to Limit Post-Recession Flight

Many U.S. employers are planning to use compensation incentives to limit “post-recessionary employee flight,” according to a survey of HR decision-makers by Workscape, a provider of employee performance, compensation and benefits administration services, conducted at the end of March 2010. According to the survey report, Managing Employees and Total Rewards during the Economic Upswing, 65 percent of respondents are considering or strongly considering pay increases to drive retention as the economy recovers, while only 46 percent will consider benefits increases.

Looking back, only 10 percent of organizations cut employees’ pay as the recession entered its third year in 2009, but 39 percent froze compensation, respondents indicated. The vast majority of those that awarded increases held them to 3 percent or less, and only 2 percent of respondent organizations increased average compensation by 5 percent or more.