Many local businesses plan to award raises and bonuses this year, according to a new survey, but continued uncertainty in the economy has no small number freezing salaries for next year as well.
Stamford-based OperationsInc recently polled 160 businesses in Fairfield County and Westchester County, N.Y., on their compensation and benefits plans for the coming year.
About a third of businesses surveyed plan to award no pay increase; another third plan to give no more than a 3 percent bump; and slightly less than a quarter plan on hiking salaries between 3 percent and 4 percent.
“It is very tough for most business owners to get back to some sense of stability,” said David Lewis, CEO of Stamford-based OperationsInc. “We have lost the ability to (predict) what will happen ”¦ a quarter or two ahead.”
Perhaps surprisingly, nearly nine in 10 businesses surveyed will award bonuses. OperationsInc Lewis said bonuses in large part today are no longer seen as a distribution of profits, but rather as a form of deferred compensation.
Nearly three in four businesses surveyed by OperationsInc indicated they plan to keep their health benefits largely the same as before, welcome news for many employees who have shouldered additional costs through the form of high upfront deductibles for many hospital procedures.
Presumably the remainder are cutting health benefits, in keeping with a separate poll of chief financial officers nationally by Grant Thornton L.L.P.
The firm reported that slightly more than one quarter of those surveyed are cutting health-care benefits, and just under a third are reducing their matches of employee contributions to 401(k) retirement programs.
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“Although many financial services companies are proceeding with caution, they are certainly more optimistic than in recent months,” said Jack Katz, a New York City-based national managing partner at Grant Thornton.
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“Executive compensation will remain a hot-button issue, but for well-positioned firms like the 13 percent who said they were increasing bonuses, attracting and retaining key talent is vital to recovery and growth in this industry. We”™re seeing a renewed focus on risk assessment, especially in the area of executive pay, and that will help instill confidence in regulators and investors.”
About half of companies plan to cut bonuses they will award this year, with about one in 10 increasing them and the rest presumably holding them flat.
Companies have also been hit with some costs they would ordinarily not expect. In a recent conference call with investors, Kingwood, Texas-based Administaff Inc. noted its benefits costs were 9 percent higher in the third quarter compared with a year earlier as measured by a per-employee basis, which it attributed to workers cashing in all the benefits they can against the possibility of losing their jobs.
Administaff also blamed increased use of COBRA health benefits by employees it has let go.
“This spike in utilization may be due to a fear of loss of health-insurance coverage in the midst of a recession, combined with an increase in treatments for swine flu,” said Richard Rawson, president of Administaff.
Having come through the worst recession in memory, nearly four in five business owners told OperationsInc they are concerned about the overall stress levels of their employee population.
“There is a lot of psychology going on out there right now,” Lewis said.
