U.S pay rises and bonuses set to shrink in 2006

2005

Most U.S workers are unlikely to get bigger pay rises next year than they got in 2005, and bigger bonuses are likely to become even more of a rarity, according to a new poll.

The survey of chief financial officers by recruitment firm Robert Half International found fewer than a third said they anticipated paying bigger salary increases in the coming year, and just 20 per cent would be boosting bonuses.

The grim outlook signalled a tougher 2006, yet could also be short-sighted in that firms could battened down too hard could end up losing talented workers, said Robert Half International.

Of those chief financial officers who said they were expected to increase pay rises and bonuses in 2006, the average response was a 5 per cent rise for pay and 7 per cent for bonuses.

"Many companies may be hesitant to increase employee compensation because of other expenses impacting the business, such as rising healthcare and energy costs," warned Max Messmer, chairman and chief executive of Robert Half International.

"But an overly cautious approach can be detrimental, particularly as the competition for top candidates intensifies. Firms that fail to reward good performance risk losing their best talent," he added.

"Organisations unable to offer higher raises and bonuses should look for other ways to recognise and motivate their teams, such as offering professional development opportunities and enhancing the work environment," continued Messmer.

"While employees value financial incentives, they also place great importance on their company's corporate culture," he concluded.

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