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  1. PW SHRM Law Summit Presentation Presented by HR 3D/Solutions 10/5/12 3 HR3D/Solutions

  2. What we will cover • 2013 Merit increase forecast data • increase by performance level • promotion % increase by category • How to use a merit increase matrix • The cost of turnover • Looking back from 2008 • Formula for tracking turnover • Savings by reducing turnover 3 HR3D/Solutions

  3. Its Still 3% • This presentation covers the merit forecast for 2013 and the actual increases for 2012 • It shows the merit increase by job category, Exempt, NEX, Executive, etc. • It also shows the average increase by performance level and promotional increase • For the past 8 years (see last chart) the average merit increase has been 3.1% • All major survey houses are forecasting 3% for 2013 3 HR3D/Solutions

  4. Conference Board: U.S. Salary Increase Budgets to Rise 3% for 2013 Based on a sample of 316 companies, the Conference Board's U.S. Salary Increase Budgets for 2013survey also reveals a median increase of 3 percent in 2012, just like in 2011. Projections for 2013 are 3 percent as well—an indication that the economic recovery has not yet picked up enough strength to substantially raise salary budgets. Despite the relatively low level of projected salary budget increases in 2013, the danger of inflation eroding the real value of the increase appears slight, according to the Conference Board. 3 HR3D/Solutions

  5. Conference Board Salary Projections U.S. salary increase budgets remain historically low, but projections for 2013 show a modest increase, according to The Conference Board annual salary increase budgets survey report released today. For the second straight year, the median salary increase budget is 2.5 percent. Projections for 2013 show a modest increase to 3 percent. (Salary increase budgets refer specifically to the pool of money that an organization dedicates to salary increases for the coming year. Generally, it is represented as a percentage of current payroll.) The lowest median salary increase budget forecast for 2013 is in the transportation industry—2.25 percent for exempt employees and executives. The insurance industry is also below the 3 percent median overall forecast for non-exempt salaried, exempt, and executives, while the banking sector reported the lowest projected 2013 increase for non-exempt, hourly employees. Across industries, the 2013 forecast for salary increase budgets showed little variation, with no employee group in any industry projected to exceed the overall median of 3 percent. 3 HR3D/Solutions

  6. Aon Hewitt • According to Aon Hewitt's survey of more than 1,300 U.S. companies, base pay increases for salaried exempt workers were 2.8 percent in 2012, up marginally from 2.7 percent in 2011. Salaries have inched upwards year-over-year since 2009 when pay increases reached an all-time low of 1.8 percent. • Pay increases are expected to rise slightly in 2013. For executives, salaried exempt and salaried nonexempt workers, Aon Hewitt projects base pay increases of 3.0 percent in 2013. 3 HR3D/Solutions

  7. Mercer’s 2012/2013 U.S • According to Mercer’s 2012/2013 U.S. Compensation Planning Survey, the average raise in base pay is expected to be 2.9 percent in 2013, up slightly from 2.7 percent in 2012. In 2011, the average increase also was 2.7 percent, which was up from 2.3 percent in 2010. • The survey also found more than 95 percent of organizations are planning to award base salary increases next year. 3 HR3D/Solutions

  8. Aon Hewitt Survey Shows Marginal Rise in Salary Increases in 2012; 3 HR3D/Solutions

  9. World At Work by Employee Category 3 HR3D/Solutions

  10. US Total Salary Budgets by Employee Group 3 HR3D/Solutions

  11. U.S. Trails for Projected 2013 Salary Budget Increases 3 HR3D/Solutions

  12. Distribution of Salary Budgets –World at Work 3 HR3D/Solutions

  13. Base Salary Increases by Job /Performance LevelCulpepper 3 HR3D/Solutions

  14. Promotion as a % of SalaryCulpepper 3 HR3D/Solutions

  15. US Base Salary Increases 2005 - 2012 3 HR3D/Solutions

  16. Summary of 2013 Salary Increases Mercer expects that among midsize and large employers across the U.S., the average raise in base pay is expected to be 2.9 percent in 2013, up slightly from 2.7 percent in 2012 and 2011, and 2.3 percent in 2010. Hay Group forecast showing an average 3 percent salary budget increase for 2013, for a net inflation-adjusted pay gain of 0.8 percent, after employees saw an estimated 0.6 percent inflation-adjusted net loss in 2012. WorldatWorksimilarly predicted a 3 percent expected increase in 2013 up from 2.8 percent in 2012, in line with The Conference Board's findings. Aon Hewitt expects 2013 base pay to rise 3 percent for executive, salaried exempt and salaried nonexempt positions, and to increase 2.9 percent for nonunion hourly and 2.6 percent for union positions. Towers Watson Data Services Salary Budget Survey of 857 U.S. companies, conducted in June and July of 2012 shows companies are planning pay increases that will average 2.9 percent in 2013 for their salaried non-management employees Culpepper predicteda 2.95 percent expected increase in 2013 up from 2.8 percent in 2012 3 HR3D/Solutions

  17. How to Use a Merit Matrix • A merit matrix is used to reward staff within a set merit budget • The merit pool is set up to keep the staff on par with the CPI increases, while providing top performers a greater increase • The matrix is designed to reward top performers that are low paid in their ranges, by giving them more merit dollars and slowing down high paid lower performing staff 3 HR3D/Solutions

  18. Merit Matrix Example 3 HR3D/Solutions

  19. Are you Tracking Turnover? • Each year HR 3D/Solutions conducts a voluntary turnover survey for DC area firms • Turnover has decreased as the economy has slowed • The cost of voluntary attrition runs between 20% and 30% of salary • HR should do exit surveys of staff leaving to see what their reasons are 3 HR3D/Solutions

  20. Turnover Since 2005 • The overall average turnover percentage for all companies in 2011 was 13.7% • The overall average turnover percentage for all companies in 2010 was 15.17% • The overall average turnover percentage for all companies in 2009 was 12% • The overall average turnover percentage for all companies in 2008 was 16.9% • The overall average turnover percentage for all companies in 2007 was 15.2% • In the 2006 survey the overall turnover rate was 19.4%. • In the 2005 survey the overall turnover rate was 19.2%. 3 HR3D/Solutions

  21. Turnover by Size 3 HR3D/Solutions

  22. Turnover Cost Formula 3 HR3D/Solutions

  23. Cost Savings Example 3 HR3D/Solutions

  24. Please Participate in the 2012 Survey • We had over 50 companies participate last year • The survey is conducted in February and the results are released in early March • The report is free for all participants • Contact us at HR3D/Solutions and we will send you the survey to complete. If you want last years survey we will send it to you upon request 3 HR3D/Solutions