New survey reveals that less than half (49%) of Irish businesses expect a return to pay increases in 2012 but nearly two-thirds (60%) expect pay increases by 2013, with variations across employee groups and industries

• Where expected, the typical planned pay increase is 2.5% in 2012 and 2013. Over a third (35%) of companies are reviewing their incentive plans in 2012, with just under (30%) planning to do so in 2013.

PwC today launches its latest Reward trends snapshot survey report – examining salary movements from 2011 to 2013. This survey also reviews key drivers of pay decisions, and the prevalence of various types of incentive plans and benefits provided including any plans to change these. The survey was undertaken in February 2012 amongst the HR and Finance Leaders of Ireland’s top companies across all sectors and had 150 participants.

Key findings in the survey include:

• Just under half (49%) of survey respondents provided or expected to provide salary increases in 2012, with (60%) of respondents expecting a return to salary increases in 2013, typically at senior, middle management and professional levels. This is up from 41% in 2011
• While salary freezes remain more prevalent for executives and production employees, half (50%) of respondents expected salary freezes to continue in 2012, with less than half (40%) of respondents expecting to freeze salaries for these employee groups in 2013
• According to the survey, very few organisations anticipate salary decreases in 2012 and none of the participants forecasted salary decreases in 2013
• The survey revealed that approximately the same percentage of respondents in Financial Service (48%) and non Financial Services (49%) gave or expected to give salary increases in 2012. For 2013, (49%) of Financial Services organisations expect to provide salary increases, compared to a higher prevalence of increases in non Financial Services organisations (59%)
• According to the survey, levels of pay increases, where given, were 2.5% in 2012. Companies also expect this to be 2.5% in 2013. There was little variation across sectors and employee levels
• The survey suggests that organisations are experiencing salary pressure for certain employee segments. This is primarily driven by skills shortages for experienced specialists in technical areas (e.g. software, engineering) and senior roles in finance, this trend is consistent with the findings of the survey in 2011
• According to the survey these salary pressures are also impacting the recruitment and retention of staff in the above areas as well as in compliance and sales, especially at the more senior levels
• The survey also shows that only 9% of participants have a pension cap strategy in place. 17% of participants have a strategy in place with regard to the pension levy

As was seen in our 2011 survey, this year’s survey again confirms that most organisations link salary increases to company performance, individual performance and external benchmarking rather than CPI/inflation levels.

A number of participants in the survey are currently reviewing components of their reward programmes. The main areas being reviewed include performance linked bonus plans, annual profit share bonuses and to a lesser extent guaranteed and deferred annual bonuses.

According to the survey, 77% of participants have a performance management system in place (for tracking employee performance against agreed targets) with 11% of companies seeking to make changes to their performance management systems in 2012 and 4% expecting to make changes in 2013.

60% of respondents have flexible working arrangements, with 37% respondents having home working arrangements for selected staff.

Gerard McDonough, Director, PwC Reward Advisory Services, said: “Companies are continuing to review the design of their remuneration packages, seeking to optimise the value they get from their mix of fixed and variable, short and long-term pay.”

As in our 2011 survey, bonuses and incentive plans were again in the spotlight, with 25% of survey participants seeking to make changes to their annual performance linked bonus schemes. According to the survey, most organisations (75%) link the annual bonus award to performance.

Mary O’Hara, PwC Human Resource Services Partner added: “After a period of pay cuts and freezes, companies are once again focusing on the role of remuneration in attracting and retaining key talent. Almost two thirds of participants in the survey are forecasting a return to pay increases in 2013; however these increases are focused on specific roles and levels within these organisations and not across the board.”

ENDS

Notes to editors:

• Source: PwC Reward trends snapshot survey 2012
• The survey research was carried out in February 2012 amongst 150 organisations in Ireland across all business sectors
• The following table shows the salary movements and forecast salary movements for 2012 & 2013 (where companies know what they are forecasting to do):

2012 - Pay increases, pay freezes & pay decreases

2013 - Forecasted pay increases, pay freezes & pay decreases

Other notes:

The contents of the report include:
 

• Actual or expected salary increases for 2011, 2012 and 2013 for executives, senior management, management, professional employees, administration/support employees, graduate and production/hourly employees
• Drivers of salary increases and compensation philosophy
• Information on the prevalence of annual bonus plans, long term incentive plans, employee share plans, benefits and other reward elements
• Information on changes to annual bonus plans, long term incentive plans, employee share plans, benefits and other reward elements in 2012 and 2013

PwC 15th Annual Global CEO Survey revealed:

• One in four CEOs found themselves unable to pursue a market opportunity or have had to cancel or delay a strategic initiative because of talent challenges
• One in three CEOs is concerned that skills shortages will impact their companies’ ability to innovate effectively

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