The difference between a three percent salary structure adjustment, which approximates changes in labor rates, and a four percent salary increase means an organization has one percent of payroll to truly reward employees
NEW YORK (PRWEB) August 2, 2006
Buck Consultants, an ACS company and one of the world’s leading human resource and benefits consulting firms, announced today the results of a national survey of U.S. employers on compensation planning.
Buck’s study “Compensation Planning for 2007” was conducted in the second quarter of 2006. It analyzed responses from more than 370 U.S. organizations on target and actual salary increases. The survey also studied salary range structure, lump sum payments, promotion budgets, short-term incentives, hiring and retention bonuses, and geographic pay differentials.
U.S. employers are planning a slight increase in compensation for the next fiscal year. Target median total salary increases for the next fiscal year are 4.0%, compared with a target of 3.7% to 3.8% for the current fiscal year. The target median increase for CEOs is 4.0% for both the current and next fiscal years.
Ninety-two percent of survey respondents have a salary increase budget, with nearly 80% timing their salary increases at a focal point during the year.
“Compensation practices continue to evolve, with a greater linking of pay for all employees to business outcomes,” said Larry Reissman, Principal in Buck’s compensation consulting practice. “Each component of compensation is being examined to determine if costs and results are appropriate.”
Twenty-one percent of respondents have a separate promotion budget. The median promotion increases range from 6.0% of base pay for non-exempt employees to 7.8% for directors.
Sixty-nine percent of organizations report having a formal salary range structure. A large majority make salary range adjustments on a 12-month cycle, with a median target adjustment for the next fiscal year of three percent.
“The difference between a three percent salary structure adjustment, which approximates changes in labor rates, and a four percent salary increase means an organization has one percent of payroll to truly reward employees,” said Reissman. “Managers need to spend these dollars wisely if they want to realize a competitive return on this investment.”
The survey found 41% of organizations provide geographic pay differentials. The resources most used to determine the differentials include geographical differential surveys, general market data, and area-specific market surveys.
Eighty percent of organizations offer short-term incentive plans. Targeted spending on short-term incentive plans is expected to be unchanged from prior years, ranging from a median of 5% of base pay for non-exempt employees to 15% for managers and 40% for executives. Targeted spending on CEO short-term incentive plans remains at 80% of base pay.
“The performance goals associated with these executive bonus plans are coming under increased scrutiny,” said Reissman. “There needs to sufficient stretch in the goals so that awards are truly earned, and the measures better reflect the company’s strategy.”
A majority (56%) of survey respondents offer hiring and/or retention bonuses. Information technology is the corporate function most likely to trigger such a bonus. Hiring bonuses range from a median of 5% of base pay for non-exempt and professional employees to 20% for the CEO. Retention bonuses range from 5.5% of pay for non-exempt employees to 18% for executives.
Buck Consultants, an ACS company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation’s first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, human resource management, compensation and employee communication. News and other information about Buck Consultants is available at http://www.buckconsultants.com. Buck is an independent subsidiary of Affiliated Computer Services, Inc.
ACS, a global FORTUNE 500 company with more than 55,000 people supporting client operations reaching nearly 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The Company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS." ACS makes technology work. Visit ACS on the Internet at http://www.acs-inc.com.
The statements in this news release that do not directly relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are outside the Company's control. As such, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Factors could cause actual results to differ materially from such forward-looking statements. For a description of these factors, see the Company’s prior filings with the Securities and Exchange Commission, including our most recent filing. ACS disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future event, or otherwise.
An executive summary of Buck’s survey “Compensation Planning for 2007” is available to the media by contacting Ed Gadowski at (201) 902-2825. The survey report is available to other interested parties for $200 from Buck’s Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 1-800-887-0509. It can also be ordered online at http://www.bucksurveys.com.
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