"Compensation Plans in Curious Times: Salary Increase Budgets Being Reduced"
Charles Peck
The Conference Board, December 2002.
The Conference Board reports in this study that the threat of war, a sluggish stock market and profit worries are negatively impacting companies’ compensation plans. Most respondents said that their salary increase budgets are presently lower than initially budgeted for most employee classes. Budgets are down across the board in the service sector and for all employee classes except hourly workers in the manufacturing industry. The financial industry was the one industry studied that has maintained its original salary increase allowance. Overall, non-exempt salaried personnel are most affected by the cutbacks with original 2003 budgets adjusted from an average 4 percent increase to an average 3.6 percent increase. Companies reported that they would be pursuing a variety of cost-cutting measures in the upcoming year, including an increased use of restricted stock in place of stock options, delaying merit increases, eliminating vacation carry-over and freezing executive salaries. The Conference Board surveyed 75 companies in the manufacturing, financial and service sectors for the study.
