Surveys from earlier this year projected that companies would increase their salary budgets by between 3.7 percent and 3.9 percent next year, about the same as in recent years. But the groups that conduct these surveys have updated them to reflect the problems in the economy -- and the picture is not as clear as it was.
Downward Pressure on Budgets
"Companies are under intense pressure to reduce costs," said Ken Abosch, North American lead for Hewitt's compensation consulting practice.
According to an online survey update by WorldatWork, a global HR association, about one-third of companies are now planning to reduce their 2009 raise budgets. About one-quarter say it's too soon to tell, and about 40 percent are not changing their plans. Other surveys find between 25 percent and about 40 percent of companies revising their salary budgets in light of the downturn.
Most of these companies will still give raises, said Alison Avalos, practice leader for WorldatWork. But they may not be as large or as widespread as before.
So what can you do to get through these uncertain times? Experts have two pieces of advice: First, focus on your job performance. And second, make sure you understand the message behind whatever raise you get.
Be a Top Performer
Even in good times, top performers tend to get larger raises. In 2007, for example, WorldatWork found that about one-quarter of workers were rated as high performers, and they got raises that averaged 5.2 percent. The two-thirds of workers considered middle performers got average raises of 3.6 percent. Poor performers got smaller raises or none at all.
That focus on good performance will be intensified by the poor economy. "I think employees are probably going to see a lot more scrutiny on performance this year," said Erin Packwood, a principal in Mercer's Human Capital Consulting Group.
Abosch said even companies that are cutting their raise budgets are taking care to protect their top performers, whether it's by giving them top priority for raises or by giving them bonuses or stock.
Top performers have other advantages, as well: They're more likely to get promoted and will have an easier time finding a new job if they need to.
Understand the Message
If you don't get a raise -- or you get just a small one -- does that mean you have been tagged as a below-average worker?
Not necessarily. Even in good times, good performers don't always get healthy raises.
"Employees may already be paid very competitively," Packwood said. In that case, the raises will go to people whose salaries are below market rate. Your smaller raise may not be a reflection on your performance.
And if you get a good performance review but don't get a nice raise to match, ask your boss what it means. It could be that your company is one of those cutting back on salary increases and no one got a big raise this year.
Abosch said the uncertain economic conditions and smaller raise budgets mean "you're probably going to see an even greater disconnect between someone's performance rating and the pay."
