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Forecasted 2013 U.S. Base Salary Increases Remain Stable

July 16, 2012 — U.S. employees can expect median base salary increases of 3% in 2013, according to research released by Hay Group. These increases are consistent with forecasted base salary increases reported by Hay Group for the past two years. After factoring in annualized consumer price index growth at 2.2%, the resulting pay movement for 2013 is a net gain of 0.8%, after employees saw an estimated 0.6% net loss in 2012.

These findings align with the top-level results of the "WorldatWork 2012-2013 Salary Budget Survey."

"With the economy continuing to grow slowly, it is not surprising that salary increases have followed suit," said Jeff Blair, Hay Group's U.S. productized services leader. "Relatively low annual salary increase budgets are limiting the financial rewards available to employers. As a result, organizations are increasingly focused on improving employee engagement and creating a positive work climate for employees."

According to Hay Group's research, median 3% pay increases are being reported for executives, middle management, supervisory and clerical positions. The 3% increase holds fairly steady across most industries, except the oil and gas and luxury retain sectors, which report 3.3% and 3.5% median increases, respectively.

"Sectors with increases above the general industry median often have more optimistic business performance outlooks," said WorldatWork member Tom McMullen, Hay Group's North American reward practice leader. "Some sectors rebounded more quickly and have higher margins than other industries, which may explain why projected base-salary increases are higher. Moreover, in most industries we see organizations seeking to remain competitive by placing greater emphasis on variable pay programs, career development opportunities, meaningful job designs and nonfinancial recognition programs.

"Organizations are devoting more time and energy to better understanding what employees truly value in their reward package and modifying their programs to reflect those preferences," McMullen said. "Quite often, it is the lack of attention to some of the nonfinancial rewards that drive good employees out of organizations, so this can go a long way toward improving employee engagement and retention."

Hay Group's forecasted results are based on the latest data available from Hay Group's U.S. database, provided by 350 U.S. organizations from March through June 2012. This is Hay Group's 33rd year of conducting the survey. Typical respondents to the survey include compensation professionals in the HR departments of small to large size U.S. organizations across a wide range of industries. Hay Group's U.S. database represents compensation practices for almost 2,900 companies and more than 6.7 million employees.

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