Last week in Toronto, Mercer projected an average salary increase of 3.2% for 2013. This number was based on the firm’s 2012/13 Compensation Planning Survey, which came out earlier this year.
While employers at the presentation were anxiously awaiting that number, they were also happy to hear some of the general trends in compensation planning that they should be aware of for 2013.
Mercer principal Stephen Hornberger provided some thoughts on what’s true and what’s not in four areas of compensation planning.
1. Most organizations focus on building their talent pools from within.
This is actually a reality, and not a myth, said Hornberger. According to Mercer’s Compensation Planning Survey, 40% of organizations focus on a build strategy (i.e., building talent from within an organization) for executive positions and 39% for middle management roles.
2. Most companies target similar industries to staff senior roles.
This is also a reality, said Hornberger, as most companies are targeting employees within their industry. But this can also be bad news. “Your employees could be poached,” warned Hornberger. So he advises employers to consider looking more broadly into other industries.
3. There is lack of transparency around the salary administration process for employees.
This is definitely true, he said. Transparency around compensation for employees is not common practice. According to the survey, more than half of organizations (56%) do not communicate with employees around the salary increase budget. And only 20% of employees (encompassing all grades of salary levels) know all the salary ranges in a company.
But Hornberger says this is beginning to change; companies are starting to trend toward greater transparency, he said.
4. The annual base salary increase budget is intended to cover “off-cycle adjustments.”
While the intention is there, in reality, only 10% of organizations hold or delay some of their salary increase budget for off-cycle adjustments (those adjustments made after a budget is implemented). And the average amount of salary increase budget held or delayed for these type of adjustments is 0.6%.