Zeev's Turnips Patch-No Politics (ZEEV)

[Train Guy]

More companies let pay freezes thaw
By Stephanie Armour, USA TODAY
Posted 8/2/2005 12:27 AM

Salary freezes have all but disappeared for millions of American workers as a stronger economy has prompted companies to lift pay caps and even slightly increase raises.

The good news: The number of employers reporting salary freezes for some or all employees has dwindled to 2% this year from a high of 16% in 2002, according to a July survey by Mercer Human Resource Consulting. More employers also are supplementing salaries with cash awards, signing bonuses and other incentives.

Employers plan to grant average pay increases in 2005 and 2006 of 3.6%. That's a slight uptick from a year ago, when raises averaged 3.5%.

The drop in the number of companies with pay freezes reflects employers' concerns that those with a freeze will lose workers or job candidates to competitors. Also, those with freezes have fallen behind pay scales of other companies in their industry.

But salary freezes are still in place in industries facing challenges, such as autos and airlines, says Ravin Jesuthasan of professional services firm Towers Perrin.

"Most organizations are providing for nominal pay increases," he says. "(Pay increases) are a continued reflection of uncertainty. Companies are hesitant to do anything that locks them in."

The Mercer survey includes responses from nearly 1,350 employers and reflects the pay practices affecting close to 13 million workers.

Pay increases are highest at the top, with executive-level employees getting an average of 3.9% compared with 3.4% for non-union hourly workers.

Companies also are using other methods to reward employees:

• Non-cash awards. More than two-thirds of employers provide some type of recognition award that doesn't involve cash.

Some companies give high performers free car washes, premium parking places, American Express gift checks and employee-of-the-month plaques. Such perks are especially prevalent in service industries.

• More use of bonuses. Cash awards, sign-on bonuses or bonuses based on the completion of a project are in vogue as employers try to motivate employees with money — without permanently boosting pay scales.

At Hyperion, a software company based in Santa Clara, Calif., employees' bonuses are based on corporate performance, business-unit performance and individual performance reports. Bonuses are given twice a year.

"It keeps people's eyes on the ball," says Steve McMahon, vice president of global human resources. "They're more engaged."

http://www.usatoday.com/money/workplace/2005-08-02-salaries-usat_x.htm?POE=MONISVA