Human Capital & Careers

Accounting Folks See Healthy Raises

With a tenuous economy, companies hold the line on base pay, but rely more on merits and bonuses — with finance, consulting, and legal workers doin...
Alan RappeportSeptember 2, 2008

In general, hard times have American companies holding pay steady and keeping increases in line with inflation, according to a new survey by Hewitt Associates. But accounting, consulting, and legal executives can expect above-average base pay boosts averaging 4.6 percent this year, and also will score the steepest merit-pay rises.

The human resources consultancy queried 1,073 firms and found that overall base salaries will rise by an average of 3.8 percent in 2009, compared to 3.7 percent in 2008 and 2007. Meanwhile, merit-based bonuses are projected to rise by 10.6 percent in 2009, a dip from 10.8 percent in 2008 and 11.8 percent in 2007.

Employees relying on base pay seem certain to feel more of a pinch this year, as Hewitt projects 3.7 percent inflation for 2008, the highest in three years. This year, 2 percent of companies froze salaries, and in 2009 1 percent plan to do so. In 2009, 15 percent of companies say they plan to reduce their base salary budgets because of concerns about the economy.

“With the current economic climate, we would anticipate seeing lower base pay raises, smaller variable pay awards and more companies freezing wages,” said Ken Abosch, of Hewitt’s North American compensation consulting business. “Our findings indicate that companies are making small corrections, but they aren’t panicking — they’re staying the course and remaining relatively stable compared to prior economic downturns.”

The 4.6-percent average base-pay increase for accounting, consulting, and legal executives is second only to executives working in the oil and gas industry, whose pay will rise by 5.5 percent. Executives working in banking and finance will see base pay increases of 3.8 percent, according to Hewitt.

The top-level accounting, consulting, and legal executives scoring merit-based hikes will see them rise by 13 percent. Those merit-pay earners working in the aerospace industry can expect a top raise of 12.1 percent, while oil and gas workers will receive 11.3 percent at that level, and 10 percent for those working in banking and finance. The company merit-pay average for executives across all of 2008 should be 9.2 percent.

Abosch said that 75 percent of this year’s pay increases came from growth in one-time merit-based pay such as signing bonuses and performance awards. Of the companies polled, 90 percent use such rewards to attract and keep talent.

In the area of base pay, executives will see the largest increases, compared to other employees. Their base salaries across all industries will rise by 3.9 percent, compared to 3.7 percent for hourly non-union employees and 3.3 percent for union employees.

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