As salary budgets have seemingly stabilized following three years of record lows, U.S. and Canadian workers and expecting to afford a 3 percent increase to the salary budget for all employees, according to the U.S. 2012-2013 National Salary Budget Survey conducted by Kenexa Compensation, a global provider of business solutions for human resources.
This estimated 3 percent growth in salary budgets matches the figure respondents report for 2012, an uptick from 2009 when salary budget levels dropped to 2.5 percent for executives and nonexempt employees and 2.8 for managers and exempt employees.
"Since increase budgets bottomed out in 2009, many organizations have been looking forward to the time when they would get back to normal," says Zahir Ladhani, head of Kenexa's Compensation's business unit. "With increase budgets in North America hovering around the 3 percent mark for two years running, it appears as though we have now achieved a new normal. Budgets such as these will continue to put pressure on organizations to ensure that they are paying competitively and retaining their top talent."
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Still, salary growth remains behind levels during 2008 when the median increases neared 4 percent for executives, managers, exempt and nonexempt employees. Some industries are seeing even higher salary growth, such as biotechnology at 3.5 percent and software at 3.1 percent, while other industries are experiencing lower growth, such as education, nonprofit and government organizations, and construction at 2.5 percent.
Respondents are also extending the eligibility for variable pay, especially among executives, allowing respondents to account for earned awards as opposed to following long-term commitments to pay employees specific, predetermined incremental levels. Another 71 percent of respondents say they plan to keep their 2013 salary increase budgets the same from 2012 while 22 percent of respondents expect larger increase budgets for next year.
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