The Hay Group just released the results of its 2010-2011 Salary Budget Spot Survey conducted in November 2010.  Over 450 organizations participated in the survey.

The good news it that it appears that salary budgets and are stabilizing (after dropping from earlier forecasts, due to the weak economic recovery).  While many employers are planning stable to modestly-increasing workforce levels in 2011, most employers are done cutting pay and people, and most have restored pay cuts and/or cancelled salary freezes implemented in the past two years.

The study predicts 2.8% in overall salary increases for 2011, or 3.1% if organizations planning no increases are excluded from the data.  While this is still a historically low number, it is above 2009 and 2010 levels.  2010 pay increases were about 2.7.% in 2010, excluding companies that reported 0% pay increase budgets for the year (2.2% including them), according to the Hay study.  Overall merit-only pay increase budgets (excluding promotions, market-related adjustments and other budgeted pay increases) are 2.8% for 2011, excluding 0% budget participants, and 2.5% including them.

Salary structures were increased 2.2% overall in 2010, excluding those who made no adjustments (1.1% including organizations that made no adjustments).  Similar pay structure adjustments are predicted for 2011, although fewer organizations are planning 0% increases. Projections for 2011 are 2.2%, excluding organizations anticipating 0%   adjustments, and 1.4% including companies projecting no increases for the year.

We expect to see quite a bit of industry differentiation in 2011, as the economic recovery has been fairly uneven so far. Expect labor markets and pay increase budgets to be higher in industries such as energy, technology and biotechnology, healthcare and consulting, while some of the weaker areas include public-sector employers, non-profits, manufacturing and construction.

On a positive note, the study revealed that only 13% of participating organizations have reduced their pay increase budgets for 2011 since originally projected earlier in 2010 (vs. well over one-half of organizations in 2008 and 2009 for the upcoming year's plans).

The Hay Group study also showed that nearly one-quarter of participants (23%) were planning to increase staffing in 2011 (vs. much lower percentages in the previous two years), and this is an encouraging sign for job seekers and the economy alike.

Overall, the trend is towards much fewer pay and employment cuts, and towards slightly increasing pay increase budgets and hiring plans.  That's progress, even if it's a very modest show of improvement.

As a compensation professional who tries his best to stay up on what's happening on the business, HR and compensation world, I must say that I'm astonished at how much information and advice is available, especially on-line.  There is an amazing array of information for HR and compensation professionals on the web, but but it requires a fair amount of sifting through the mass of information to find the really valuable pieces of information out there.

One blog posting I read this morning while catching up on the latest happenings really got me going. The post, "Six Pay Raise Alternatives" presents some good issues and ideas to think about, but also floats a fair amount of questionable ideas and advice.  Briefly paraphrasing, here are six pay raise alternatives that were suggested:

1. Pass into your employees some of the perks you as a manager receive. The primary examples used were sporting and concert tickets, such as "a $150 ticket to a Billy Joel concert goes a long way, and provides maximum ROI." First of all, while this would be a nice firm of recognition, it's not a credible pay raise alternative.  Second, if the company is following the IRS code (always a good idea!), this example would create a taxable event for the employee, but I digress...
2. Treat your employee to a luxury meal. Certainly a nice gesture, and one that many employees would appreciate, but this is another form of recognition that should be an ongoing part of being a good manager, by recognizing and expressing appreciation for your employees and their performance. 
3. "Give cell phone breaks." Another nice gesture, but something employers should already be assisting with or providing for employees who are expected to be available or reachable most hours of the day.  This is a mild perk/benefit, but certainly not something virtually any employee would consider to an alternative or substitute for a merit-based pay increase, even a small one (which most of them are today).
4. "Award your employee a new title."  Yikes!  As compensation advisor that spends a good chunk of his time trying to untangle the messes and expectations that lie behind the indiscriminate awarding of job titles, this is really unsound advice (and I'm struggling to stay diplomatic).  Anyone who tells you that job titles are "free" or don't change expecations doesn't understand what they are talking about, because inflated or "vanity" titles almost inexorably lead to internal equity concerns, revised and/or unrealistic pay expectations, etc.
5. "Offer flexible schedule or telecommuting."  Yea, something we can agree on, but not really a pay increase alternative, although this would be considered is a valuable benefit to some.  Many employees appreciate the opportunity to save on commuting time and related time and cost elements of going into the office every day.  This benefit should be reserved for highly motivated self-starters that don't need a lot of prodding or supervision (in other words, the employees you should fight to give a raise to, and to ensure their on-going pay competitiveness).
6. Let your employees come up with their own perk, and if it's a viable option, implement it immediately.  This option has appeal on it's face, but be aware of potential perceptions of internal equity issues or favoritism.  I'm not opposed to individualized rewards and recognition, but most employees are are keenly aware of what they observe around them, and it they sniff "unearned" or obviously inequitable rewards, you as a manger will will suffer from other morale and internal equity concerns that can challenge your credibility and effectiveness.

There are actually some really good nuggets embedded in here: recognition is a good thing, but it's not something that should be done only on special occasions.  It's a part of being a good manager and component of being an employer of choice. Other nuggets: people really appreciate being appreciated, and we recommend showing appreciation as a habit, and not something done on an infrequent or special-occasion basis.

In short, there is a lot of information and advice out there, but be discriminating and choose carefully, because when it comes to base pay and other forms of rewards and recognition, there can be negative or unintended consequences of poorly designed efforts and programs.

For instance, if you're looking to implement a new recognition or incentive program, or a strategy to address pay issues while keeping down fixed cost increases, talk with a specialist or at least someone who truly understands the issues, alternatives and consequences of of various strategies and approaches.  Too much is at stake to to take the chance of implementing poorly-designed programs or un-vetted ideas without considering the consequences.

OK, I'm getting off the soapbox!