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Contact: Mercer Feedback

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United States
New York , 1 June 2009

While companies remain focused on managing their human capital investment in the current economy, pay across jobs is becoming less consistent. Median total cash compensation (base salary and annual incentive) has increased year-over-year among some jobs and decreased for others, according to Mercer’s Market Pulse Report.

Positions in manufacturing, information technology and engineering show increases up to 2.0 percent compared to positions in marketing, finance and sales showing declines in pay. A similar variation in pay occurs among employee groups. For example, median total cash compensation for professionals has increased by almost 2.0 percent while it has decreased by nearly 5.0 percent for executives. See Tables 1 and 2.

Mercer’s Market Pulse Report, which provides early indicators of market movement within the 2009 US Mercer Benchmark Database, is based on data from more that 640 organizations from a wide range of industries.

“While salary increases overall are relatively low, certain jobs are bucking the trend with increases nearly twice the rate of the overall market,” said Susan Haberman, Mercer’s US regional leader for information product solutions. ”Organizations are paying more for these positions since they support company-specific needs.”

On the whole, median total cash compensation increases year-over-year are just about half that of base salary increases (1.2 percent vs. 2.2 percent, respectively) across all jobs, industries and geographies. According to Ms. Haberman, executive and management positions are seeing the smallest increases in pay.

Base pay

Having trimmed workforces and decreased hours with a corresponding reduction in pay, many companies continue to struggle with cost-containment challenges and are budgeting pay levels accordingly. For those employees (67 percent) receiving a base pay increase, salary budgets for 2009 are projected to be 3.2 percent on average for employees overall.

While fewer executives (56 percent) are expected to receive base bay increases – compared to more than 70 percent of office/clerical/technician and trades/production/service employees – these increases will be slightly higher. For those who receive increases, executives are expected to receive base pay adjusted up 3.5 percent in 2009 compared to increases of 3.1 percent for the employee categories of office/clerical/technician and trades/production/service. See Table 3.

These early findings from Mercer’s 2009/2010 US Compensation Planning Survey include responses from approximately 850 organizations across the US as of April, 2009.

“In response to the recession, employers have reduced staff for certain positions and placed higher value – and greater expectations – on other roles critical to the business,” said Steve Gross, global leader of Mercer’s broad-based performance and rewards consulting business. “This shift has led to greater variability in pay levels among job types, lines of business or geographies as companies allocate limited compensation budgets appropriately.”

Salary freezes

According to Mercer’s survey, slightly more than two-thirds (67 percent) of organizations are planning to grant pay increases to all employees in 2009 and 88 percent are projecting to do so in 2010.

Executives will fair the worst in terms of salary freezes. Survey findings show 44 percent of organizations are planning to freeze salaries for executives in 2009 and 15 percent the following year, compared to 28 percent and 11 percent, respectively, for office/production/service staff.

Mr. Gross said, “Companies realize that they need to be poised for a turnaround and continuing cost-cutting measures like layoffs and salary freezes may put them at a disadvantage once the economy recovers.”

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges.

For more information, visit www.mercer.com.

Table 1: Year-over-year changes in total cash compensation by job function

Source: Market Pulse Report, May 2009

Table 2: Year-over-year changes in total cash compensation by employee group

Source: Market Pulse Report, May 2009

Table 3: 2009/2010 budgeted base pay increases by employee group

Source: Mercer 2009/2010 US Compensation Planning Survey

*These figures do not include the 0% salary increases planned by some employers.

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Contact: Mercer Feedback