Economic troubles are leading companies to offer lower raises — while still doing what they can to keep high performers.
Almost half (42%) of companies plan on changing their compensation strategies because of concerns about cost, according to a recent survey by HR consulting firm Hewitt Associates.
Of that 42%:
- 66% plan to cut year-end bonuses by more than 10%
- 49% will reduce raises, and
- Overall, salaries will increase by 3.1%, or 1% lower than companies had previously expected.
However, many companies are using their limited budgets to focus on retaining star workers:
- 38% of employers said they’re reserving part of their salary budgets to make sure high performers get decent increases
- 23% are creating new discretionary, performance-based bonus pools, and
- 20% are offering retention bonuses to employees who stay with the company for a certain amount of time.