A new survey, conducted after September 11 shows that U.S. companies are making few significant changes to their existing compensation programs and taking a wait-and-see approach to the economy.
The study by financial services consulting firm Andersen found that 20% of the respondents are planning to reduce their merit budget in direct response to the recent economic slowdown and/or the events of September 11.
Although 63% of respondents cited the overall labor market conditions as a major factor in determining the 2002 merit increase budget, 58% of the companies are not planning any new changes to the base salary component of the compensation program.
Other key findings from the nationwide survey of 57 companies, mostly public companies with median revenues of US$1.5 billion, include:
- the median planned 2002 merit increase has been 3.8% to 4% for all employee groups, which is only a few tenths of a percentage point below the 2001 actual merit increase;
- half of the companies expect 2001 bonuses to be less than 50% of target, with nearly half of those anticipating no bonuses this year at all; and
- 28% of the companies said they are implementing new programs to retain valued employees.
.”Companies, for the most part, are staying the course with their compensation programs for now,” said Michael Kesner of Andersen’s human capital practice. “We found that companies are proceeding with ‘normal’ merit increases for two reasons: one is the prospect of low or no bonuses, and the other is the fear of salaries falling below the market.”