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July 23, 2010

HR Fact Friday: Pay Incentives Planned 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. The survey conducted at the end of March, 2010 found that 65% of the 476 respondents are considering or strongly considering pay increases to drive retention as the economy recovers, while 46% will consider benefits increases. 79% of those polled or interviewed represented companies with less than 5,000 employees; 7% represented organizations with 5,000 to 10,000 employees; and 13% represented companies with more than 10,000 employees.

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

Respondents who siad their organizations intend to provide incentives to retain and engage employees as the economy improves are most likely to offer:

  • Merit increases (66%)
  • Performance-based bonuses (52%)
  • Market or equity adjustments (24%)
  • Lump sum payments (12%)

Source: SHRM, HR Magazine, Stephen Miller, July 2010, pg 11

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