How many times have you heard an employee make the statement “at least we are all in the same boat?” It is a common phrase and represents a very deep seated part of human nature pertaining to working as a team, realizing joint goals, and sharing similar experiences. As many of us have seen coworkers lose their jobs, neighbors leave their homes, and staples of our communities close, there has been an even greater urge and need to feel that we are all in this situation together. However, as mentioned in previous posts, the recession has not impacted everyone uniformly. Moreover, the recovery will benefit each of us at different rates as well.
What does this mean for your organization and your relevant labor market? The answer lies in the differences. Survey research reveals that there are distinct differences in:
- Job Family
- Global Region
Different industries have shared in the downturn in different ways and required skills and abilities vary by industry focus. In other words, if I work in an industry that is recovering more quickly than another, the pressure to increase compensation is greater. Figure 1 captures projected 2011 increases from multiple sources: Mercer [2010/2011 US Compensation Planning Survey], multiple industry-specific consulting firm results [averaged for inclusion], and HCS [2011 Labor Market Increases Survey]). Not surprisingly, there are projected differences for 2011 across industries. Government and Real Estate are expected to have the lowest average increases while Oil and Gas, Pharmaceuticals, and Utilities should have the highest average increases. Given the current economic situation of these industries, skill availability in the labor market, and future expectations, these results make sense. Government continues to struggle with lower tax revenues and most expect this cycle to continue for more than year while Real Estate is flat at best and could take several years to recover a semblance of its previous growth.
There is limited job-specific data currently available since most broad-based surveys focus on board job categories to enhance comparability, ask about aggregate increases, or collect data on actual actions in the previous period.
Figure 2 summarizes the next level of aggregation above jobs with projections by major job group (HCS 2011 Labor Market Increases Survey). The survey includes 800 regional employers in the U.S. based on November 2010 projections for 2011 wage and salary increases. Executive level positions stand to increase the most at approximately 3.2 percent followed closely my Management at 2.9 percent. Professionals, Office/Clerical/Technical, and Trades/Production/Service are at similar levels of increase with Office/Clerical/Technical being slightly higher. Although there is a difference between the highest and lowest projected increase, the difference is about five percent. In some years this would not be considered a major difference. However, the lack of raises for several years in some organizations makes this small amount more significant than usual.
What about the rest of the world? As more internationalization occurs in the labor market, does parity exits across region? According to most survey projections for 2011, the findings indicate sizable regional differences (see Figure 3). North America at slightly below three percent will experience the least appreciation in salaries and wages. All other regions are estimated to increase average pay by more than five percent.
Although the economy is improving and average increases should be around 2.5 percent or higher in 2011, not all jobs and industries are the same. As you consider your compensation strategy for 2011 and 2012, it is important to keep in mind that you need to be responsive to the position and trends of your industry and the associated jobs.
Now, I want to move our discussion to the how should you measure the market and what are some of the challenges that accompany this endeavor. In the next post, an overview of the salary survey structure and processes will be provided followed by a discussion of threats to reliable results.