If your salary and compensation plans for your employees in 2013 are falling short of spectacular, you’ve got plenty of company. Median salary increases for 2013 will be just 3 percent, according to the sixth annual Compensation Planning Survey from Buck Consultants, which forecasts this low level is going to become “the new normal.”
The survey polled more than 350 companies, and while they were primarily larger firms, it’s important for small businesses to understand what the competition is doing. Here are some other trends Buck spotlights in 2013 salaries and compensation:
While they aren’t offering large raises, companies are expanding the amount and size of short-term incentive awards in 2013. Projected incentives in 2013 are larger than both actual payouts in 2011 and target payouts for 2012, for almost all types of employees. While CEOs were the only group getting smaller payouts, they also were more likely to have more types of incentives (such as stock options) open to them.
What it means for your business: The good news is that you can save money by joining the trend of using bonuses or other short-term incentives. It rewards your team, but this type of one-time payout is more cost-effective than a permanent salary increase. The bad news is that if you’re competing for top talent on the executive level, you’ll need to compete with the incentives bigger companies can offer.
Hiring and Retention Bonuses
Over half the respondents to the Buck survey offer some type of hiring and retention bonus; 56 percent offer some type of referral bonus.
What it means for your business: Competing for skilled workers might get even more challenging for your small business as the majority of larger companies are still offering these bonuses.
Over two-thirds (67 percent) of respondents say their focus in 2013 is on retaining key workers, compared to just 19 percent who say they are planning to hire.
What it means for your business: Retention is equally important (if not more so) to smaller businesses that can’t afford the time and cost of replacing key players on a busy team. Consider what you can do to retain your own key employees.
Even when employees are getting salary increases, the gain may be undercut by the fact that companies are asking employees to contribute more to their health insurance coverage in 2013. Buck predicts that increased contribution to benefits in general will be an ongoing trend.
What it means for your business: If you do provide health insurance coverage to your employees, asking them to chip in more of the premiums is a good way to keep your costs manageable. Knowing that this is becoming standard practice may make it less of a bitter pill for your staff to swallow.
While a 3 percent average salary increase is still fairly weak growth, Buck notes that the survey shows a positive trend compared to several years ago, when many employers were freezing pay altogether. Call it a slow thaw, but the upward turn in salary does mean your business needs to be on the alert. If you can’t give your employees raises this year, think of other ways you can reward them for their hard work and dedication—or you could end up losing them to a bigger firm when the springtime comes.
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