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Human Rights  » Compensation Resources, Inc. Releases Its 2005 Year-End

Compensation Resources, Inc. Releases Its 2005 Year-End

Article:

Upper Saddle River, N.J. - November 2005 - Compensation

Resources, Inc. (CRI) has released the results of its 2005

Year-End Compensation Survey. The purpose of this study was to

obtain compensation data used for trending and planning purposes

at companies of all sizes and shapes. Data was compiled from

survey questions that were developed by CRI and distributed to

companies in 16 industrial classifications, in addition to

Not-for-Profit organizations. The survey sampled year-end

compensation data from a variety of organizations, collected in

October and November 2005.

Results indicated that the average merit/salary increase for all

employee functional groups was 4.0% in 2005, and 4.2% is the

average projected merit/salary increase for all groups in 2006,

an increase over 2004 year-end survey results. Generally

speaking, Privately-Held companies reported higher percentages

of actual 2005 and budgeted 2006 merit increases overall as

compared to Publicly-Traded and Not-For-Profit organizations. As

reported in 2004, survey participants indicated that they

expected the number of layoffs, hiring freezes, and salary

freezes to decrease from 2004 to 2005; in fact, projections were

accurate, as respondents in this year's survey reported actual

decreases in these corporate events.

Highlights of this year's results, including a comparison with

the prior year's findings:

MERIT/SALARY INCREASE 2004 Results 2005 Results Group Actual

2004 Projected 2005 Actual 2005 Projected 2006 Executive 4.3%

4.3% 4.5% 5.1% Management 3.8% 3.8% 4.1% 4.4% Exempt Salaried

3.6% 3.7% 4.1% 4.0% Non-Exempt Salaried 3.5% 3.6% 3.6% 3.7%

Hourly/Production 3.5% 3.5% 3.8% 3.8% All Groups Average 3.7%

3.8% 4.0% 4.2%

These results reflect a general rise in merit increase budgets

and awards, consistent with the upward swing in the marketplace

with regard to labor conditions. Consistent with these findings

is the general expectancy of the following corporate events

among participants (including a comparison with the prior year's

findings): ACTION EXPERIENCED 2004 Results 2005 Results Action

Actual 2004 Projected 2005 Actual 2005 Projected 2006 Layoffs

28.8% 13.5% 20.1% 11.4% Hiring Freezes 19.8% 9.0% 14.8% 6.7%

Salary Freezes 7.2% 2.7% 9.4% 4.7% Cutbacks in pay 0.0% 0.0%

3.4% 1.3% Staffing Increases 46.8% 45.0% 50.3% 47.7%

Results indicated that target awards for Short-Term Incentive

Plans are much higher in Publicly-Traded companies as opposed to

Privately-Held companies and Not-for-Profit companies. Results

also revealed that target awards as a percentage of base salary

increase as revenues increase. Overall, in terms of Long-Term

Incentive Plans, respondents report a general prevalence of

cash-based plans within their companies; however, Non-Qualified

Stock Options are the most commonly provided equity award in

Publicly-Traded companies. Stock Appreciation Rights continue to

be the least commonly used Long-Term Incentive Plan. In terms of

the Compensation Package Mix, base salary remains the largest

percentage of the mix among Privately-Held and Not-for-Profit

organizations, followed by Annual Bonus/Incentives and Long-Term

Incentives. On the other hand, there is an increased emphasis on

Annual Bonus/Incentives and Long-Term Incentives among

Publicly-Traded companies, particularly at the senior management

and executive levels, since equity in the form of stock is a

readily available commodity within these organizations.

Determining pay strategies can be a very difficult and tedious

task; therefore, CRI recommends companies consider the following

approaches:

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Ø understand your employees' perceptions about the total

compensation package your company provides; Ø measure the

distinct value of the reward to employee commitment and the

organization; and Ø communicate to your employees about the

business and the financial impacts of their rewards.

It is also important to remember that the total compensation

package is not just about pay, it is also about the work

culture, hours, benefits, career development, and promotional

increases and how they balance with the employee's life outside

the organization.

Compensation Resources, Inc. (CRI) provides compensation and

human resource consulting to a broad range of companies

including start-up, emerging, and middle market companies. CRI

specializes in Executive Compensation, Board Advisory Services,

Salary Administration, Performance Management, Salary

Administration, Sales Compensation, and Expert Witness services.

For more information on our consulting services, please contact

us at (201) 934-0505 or visit our website at

www.compensationresources.com. If you would like to order the

complete report of the 2005 Year-End Compensation Survey, please

contact Andrew Sellers at 877-934-0505 x115 or order online.

About the author:

Compensation Resources, Inc. (CRI) provides compensation and

human resource consulting to mid-size and Fortune 500 clients as

well as public, private, family and emerging companies. CRI

specializes in Executive Compensation, Salary Administration,

Performance Management, Sales and Incentive Compensation,

Intermediate Sanctions, Board Advisory Services, and Expert

Witness Services. Our reference library boasts over 5,000

surveys.