ORC Sightlines
October 2004
- Survey Predicts Merit and Adjustment Budgets for 2005
- Innovative Programs Promote Wellness among Employees
Survey Predicts Merit and Adjustment Budgets for 2005
Every year ORC surveys clients in the United States regarding their plans for the following year’s merit budgets and adjustments to their salary structures. A total of 335 companies, representing 29 industries, responded to the 2004 survey. The data is cut by major industry and sub-industry group and by geography. Overall, we found that in 2004 companies granted slightly lower increases than planned and predict that their merit budgets for 2005 will remain below 4 percent.
The airline industry is projecting the lowest budgets for 2005, at 3.3 percent. Life sciences continues to project the highest, 3.9 percent, but there is definitely less differentiation between industries than seen in the past. The average projected merit budget for all companies is 3.7 percent.
The proportion of companies that manage different budget pools for their exempt technical and administrative employee groups has dropped from 8 percent of participating companies to 6 percent. Those that do so report that their technical pool will be only half a percent higher than the non-technical budget. Non-exempt merit budgets are forecast to average 3.6 percent in 2005.
Salary structures will go up an average 2.8 percent in 2005, the lowest reported figure in more than sixteen years. Few companies are differentiating technical and administrative structures and, for those that do, the differences are minor.
Thirty percent of participating companies reported that they maintain variable pay pools to cover incentive and bonus pay (excluding sales and defined management incentive programs), group or team awards, and company-wide awards such as gainsharing or cash profit-sharing. These variable pay pools are projected to be slightly lower in 2005 than in 2004, with averages of 5.4 percent for exempt employees and 3.2 percent for non-exempts (compared to 5.8 percent and 3.4 percent, respectively, this year).
Promotion budgets for both exempt and non-exempt employees are projected at 0.8 percent of payroll.
More than a fourth of employers in the survey are planning to maintain special budgets, averaging 0.7 percent, to target specific issues, such as internal and external equity or retention of critical skills.
Innovative Programs Promote Wellness among Employees
As companies focus more attention on controlling health care costs, ORC’s clients in both the Human Resources and the Occupational Safety and Health arenas are becoming increasingly interested in improving the health and well-being of their employees. In fact, professionals in human resources, medical, benefits, workers’ compensation, and OSH professionals who attended ORC’s Western OSH (WOSH) network meeting last month devoted much of their time to the subject of how companies are promoting wellness in the workplace.
Presentations made by speakers from the National Institute of Occupational Safety and Health (NIOSH), IBM, Marriott International, and the California Health Services Department highlighted the severity of health threats to employees, especially from obesity and smoking. For example, the incidence of obesity among adults rose by 92 percent in the United States during the decade between 1991and 2000. The State of California estimates that in 2005, inactivity and excess weight will cost the state more than $28 billion in direct medical, lost productivity, and workers’ compensation costs.
Companies are attacking these problems by forming cross-functional teams to protect and promote health in the workplace. Some are providing services that help employees with weight management, exercise, nutrition, and smoking cessation. Others go further and offer incentives in the form of benefit premium rebates or other payments to increase participation. Companies also offer incentives for walking or cycling to work and provide amenities such as showers and lockers that will encourage employees to exercise before or after work or during breaks.
Government agencies are also starting to reach out to employers to help them foster a work environment conducive to a healthy lifestyle. The State of California offers employers a “fit business kit” to help them get the attention of key people in the company, perform an environmental audit, and provide health foods on site. The “CA 5 a Day Worksite Program” suggests setting up farmers’ markets and working with vending machine and catering truck operators to make it easier for employees to eat right on the job.
One clear message emerged from the discussions: by promoting employee health as an organizational value, companies stand to save money and gain productivity in the long run.
The Western OSH group brings together OSH executives and medical and legal specialists from major, innovative companies based or operating in the western United States. Members share information with each other, representatives of federal and state regulatory agencies, and invited experts from the occupational safety and health or environmental fields. For more information on workforce wellness or on the WOSH group, contact Judi Freyman at 916-784-9202, judi.freyman@orcww.com.