THE YEAR OF THE

COMPENSATION

BEST
PRACTICES
REPORT

GREAT
BALANCING
ACT

PAYSCALE
PAYSCAL
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PA
AYSC
AY
A
YS
SC
CA
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AL
A
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RESEARCH
RESEARC
RE
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ESE
ES
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REPOR
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REPORT
E O
EPOR
OR
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EXECUTIVE SUMMARY
Each year since 2009, we at PayScale have conducted a survey of compensation
best practices to take a look at what transpired in the year just ended and predict
trends for the upcoming year. In analyzing this years survey results, we saw more
encouraging economic signs than weve seen in recent years as companies are
growing in size and offering raises to current employees. Yet this increased optimism
comes along with a good dose of caution as most companies lack sufficient business
insight to know what to pay to effectively attract and retain the right people. With the
more competitive economy of 2014, companies will be challenged to balance growth
with smart decisions about how to compensate talent.

www.payscale.com

In 2014 companies expect growth and increased hiring.

Competition for key talent is heating up. Growth and
hiring surges are causing big concerns about retention
as employees leave for greener pastures. Companies are
operating in the dark without access to relevant market
data and the smart ones are eagerly seeking ways to get
wiser about managing performance and compensation
structures with more reliable salary data and insights.
In 2012, we saw businesses begin to feel optimistic
again, and that upward trend continued in 2013. More
organizations grew in 2013 than the three previous years
and growth is expected to continue across the majority
of businesses in 2014. In summary, the optimism
reported by businesses of all sizes signals continued
improvement in the economy, as more companies look to
expand after a period of stagnation during the recession.

Flying High (but blind) in 2014

Companies are cautiously optimistic about 2014, with 72 percent expecting their financial situation
to improve (up from 66 percent in 2013), and only 5 percent expecting it to weaken (down from 7
percent in 2013).
Small companies are the most optimistic about their future financial performance (75 percent of
respondents), beating out both large and medium companies, where 66 percent and 72 percent
expect improvement in 2014. The information, Media & Telecommunications Industry is planning to
fly the highest in 2014, with 84 percent of companies in this industry anticipating improved financial
performance.
Hiring is also up over recent years with 54 percent of companies reporting plans to continue
expanding in 2014.
Raises returned in 2012 and that trend continued with 83 percent awarding salary increases in 2013,
and 88 percent planning to give raises in 2014.
3

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The High Wire Act

Competition is heating up and its becoming increasingly challenging to strike the balance between
paying enough to retain top talent and adhering to the compensation budget. Talent retention
continues to be the primary concern among businesses. In 2009 only 28 percent of companies listed
retention as their top concern, but by 2013 that number more than doubled, increasing to nearly 60
percent.

Companies Who Considered Retention a Main Concern

28%

20%

47%

49%

59%

57%
59%

2009

2010

2011

2012

2013

2014

The skills gap also continues to be a top concern for most businesses. Half of companies surveyed
cited they are struggling to fill skilled job positions with nearly two-thirds of companies in the
Information, Media and Telecommunications industry and Manufacturing companies reporting
concerns.
While companies are striving to secure talent, they lack sufficient insight about effective
compensation to attract and retain the right people. In our 2013 survey, a whopping 75 percent
of respondents reported some degree of dissatisfaction with the compensation data and insights
available to them. This underscores a huge need for access to better compensation data reflecting
real time market trends.

www.payscale.com

2013 Review
The skills gap continues to be a concern. Half of companies
said they are having a difficult time filling skilled positions.
Retention concerns increased. In line with organizational
expansion, concerns over employee retention have continued
in 2013, a trend that started in 2009. Nearly 60 percent
reported it being a high or top concern and only 10 percent
thought it not a concern at all.
Few companies are confident in their data. Even though
getting pay right is a crucial component to retention, only 26
percent of companies reported being very satisfied with the
salary data they use to set compensation.

83%
GAVE
RAISES IN
2013

Companies are growing. Of the 52 percent of organizations

that reported increasing the size of their workforce, 46 percent
reportly grew up to 10 percent.
Medium companies are growing fastest. Medium sized
companies were the most likely to increase workforce in
2013 (58 percent), with large companies close behind (55
percent) and small companies less likely (47 percent).
Information, Media & Telecommunications Industry
leads the way. Companies in Information, Media &
Telecommunications were the most likely to have grown in
2013 (63 percent).
Raises were common. In 2013, 83 percent of companies
reported giving raises, and 77 percent gave raises to at least
half of their workforce. The most common reason for raises
was performance-based pay increases (54 percent).
Bonuses are a popular option. In 2013, 75% of respondents
awarded bonuses, up from 71% in 2012. The most
common type of bonuses given were Individual Incentive
Bonuses (50 percent).
CEOs call the shots. Although the CEO is primarily
responsible for setting comp budgets, the head of HR is
primarily responsible for setting comp structures.
Top performance matters. In 2013, 54 percent gave
performance-based pay increases. Incentive-based bonuses
were the most common type of bonus given.

www.payscale.com

2014 Plans and Expectations

Retention continues to be a top concern for 2014. This
concern has increased steadily in importance since 2009,
when most companies listed retention as only somewhat of a
concern or not a concern at all. Employee retention is either
a high or top concern for 2014 to 57 percent of companies,
with that number jumping to 70 percent in the Information,
Media & Telecommunications industry and 65 percent in
Professional, Scientific & Tech Services Industry two
industries where tech jobs are highly represented.
Salaries will go up. For 2014, 88 percent of companies say
they plan to give pay raises, with the average raise expected
to be 4.5 percent.
Optimism is high. Companies are generally optimistic about
their financial performance, with 72 percent expecting
improvements in 2014, and only 5 percent expecting weaker
performance. In the Information, Media & Telecommunications
Industry, 84 percent are optimistic.
Small companies are looking up. Small businesses are
most optimistic about financial performance in 2014 with 75
percent expecting improvement compared with 72 percent of
medium companies and 66 percent of large companies.

75%

OF SMALL
COMPANIES
EXPECT
IMPROVED
FINANCIAL
PERFORMANCE
IN 2014

Theyre growing. More than 54 percent of respondents are

expecting to increase in size in 2014. That number has been
increasing steadily since 2012 when 38 percent expected
growth.
Some are in favor of passing The Fair Minimum Wage Act.
Companies have mixed opinions about raising the minimum
wage to $10.10, with 40 percent in favor of it, 30 percent
against and another 30 percent unsure.
Theyre making plans to attract and retain talent. Companies
plan to recruit and retain high-performing employees
with merit-based pay plans and additional learning and
development opportunities.
6

www.payscale.com

2014 COMPENSATION BEST

PRACTICES SURVEY RESULTS
A look back at 2013
Changes in Organization Size: 2013 and
Comparisons to Previous Years
As shown in the chart below, more organizations grew in 2013
than in either 2012, 2011, or 2010.
This change appears to show continued improvement in the
economy, as more companies look to expand after a period of
relative stagnation.
60%
53%

50%
40%

52%

50%

49%

32%

30%

28%

20%

19%

18%
14%

10%
0%

52%

OF COMPANIES
GREW IN 2013

38%

37%

THEYRE
GROWING!

9%

2010

2011
Increased

2012

2013

Stayed the Same

Decreased

www.payscale.com

 When examining results by company size, the same general

pattern emerges: the majority of respondents, regardless
of company size, chose to either maintain or increase their
organization size.
Large companies (>1,000 employees) were the most likely to
reduce workforce size, while medium companies (100 - 1,000
employees) were the most likely to increase their organization
size.

Change in Organization Size in 2013 by Company Size

80%
60%

58%

55%

47%

33%

34%

20%
0%

63%

44%

40%

9%

INCREASED

STAYED THE SAME

Small Companies

9%

11%

DECREASED

Medium Companies

Large Companies

OF COMPANIES
IN INFO, MEDIA
& TELECOM
REPORTED
GROWTH 2013

www.payscale.com

 Some additional industry highlights:

Information, Media & Telecommunications companies
were most likely to have increased in size, with 63 percent
reporting organizational growth.
The Finance and Insurance industry had a particularly
turbulent year: 51 percent of respondents reported size
increases, while 13 percent reported size decreases.
Of the 52 percent of organizations reporting an increased
workforce in 2013, 23 percent of respondents indicated their
organization grew by 0-5 percent since January 2012; another
23 percent report growing 6-10 percent.
Only 9 percent of small companies and 10 percent of medium
companies reported growing 26-50 percent, while only 5
percent of large companies reported growing 26-50 percent
Of the 9 percent of organizations that cited a reduced
workforce in 2013, 22 percent of respondents reported 0-5
percent reductions and 26 percent reported 6-10 percent.
Further insight into hiring decisions in 2013:
Previous work experience is the leading factor that impacts
hiring decisions (40 percent), with skill set not far behind
(31 percent).

SEEKING A
BETTER PAY
CHECK WAS
ONE OF THE
TOP REASONS
EMPLOYEES
LEFT THEIR
JOBS IN 2013

Most respondents reported that school reputation is the

least important factor in terms of hiring decisions (71
percent).
These trends are consistent across all company sizes and
industries.

www.payscale.com

Reasons for People Leaving

an Organization: 2013 and
Comparisons to Previous Years
The top two reasons for people leaving an organization in
2013 are the same as 2012 and 2011: personal reasons and
seeking higher pay elsewhere (21 percent).
Relocation, retirement, and cultural fit remained stable
as additional reasons for leaving an organization in 2013.
Relocation remained at 5 percent, retirement likewise
remained at 7 percent, and culture fit rose from 9 percent to
10 percent.
For small companies, poor performance was the most
important reason for someone leaving an organization (23
percent), and 56 percent of small companies said it was one
of the top three reasons.
For medium and large companies, seeking higher pay and
advancement opportunities elsewhere were the two most
common reasons.
In Finance & Insurance and Information, Media, and
Telecommunications, seeking advancement elsewhere was
the most important reason for leaving.

CONCERNS
ABOUT
RETENTION
HAVE MORE
THAN DOUBLED
SINCE 2009

For Healthcare & Social Assistance and all other industries

(combined together), personal reasons (family, marriage, etc.)
were the biggest reasons for people leaving.
79 percent of respondents agree pay is often not the
primary reason people first start looking for a new job. This
percentage has remained consistent over the last four years.

10

www.payscale.com

Employee Retention: 2013 and for

Comparisons to Previous Years
Aligned with anticipated organization expansion, concerns over
employee retention have increased in 2013; a trend that started in
2009.
In 2009, most respondents felt employee retention was either
somewhat of a concern, or not a concern at all, but that changed
as the economy began to stabilize.
In both 2010 and 2011, about 50 percent of respondents felt
it was a high or top concern, and only 15 percent in 2010 and
17 percent in 2011 felt it was little or no concern.
In 2012 and 2013, nearly 60 percent said employee retention
was a high or top concern, and only 10 percent felt it was little
or no concern.
This level of concern was consistent across company sizes,
although medium-sized and large-sized companies were most
concerned with retention: 59 percent cited it as a high or top
concern, compared to 54 percent of small companies.

FIND OUT HOW

THE WAGES YOU
CARE ABOUT ARE
PERFORMING
The Quarterly PayScale
Index will show you the
trends for your specific
location and industy.
Get a free PayScale Index
Report:
http://pysc.al/ttDBh

11

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 Similarly, as shown in the chart below, concern about

retention was largely similar across all industries: in the
industry least concerned with retention, Finance & Insurance,
52 percent of respondents still indicated it was a high or top
concern.
The Information, Media & Telecommunications industry was
most concerned: 70 percent said it was either a high or top
concern, and only 8 percent reported it was a low concern or
no concern.

2013 Employee Retention Concerns by Industry

HEAD ZOOKEEPER

53%

Professional/
Technical Services

8%

HUMAN
RESOURCES NINJA

65%
10%

Manufacturing

SHE-RA, PRINCESS
OF FINANCE
PEOPLE YODA

12%

Other

BEST SELFCHOSEN TITLES:

53%

Information/Media/
Telecommunications

CHAMPION
COMPENSATOR

8%
70%

Healthcare/
Social Assistance

8%

DIRECTOR OF
HAPPINESS

63%
13%

Finance/Insurance

52%

0%

10%

20%

30%

40%

50%

Little or No Concern

60%

70%

80%

High or Top Concern

CHIEF CAT
HERDER
COMP WARRIOR
DA BOSS
THE DUDE
FAIRNESS
DIRECTOR
RAIN MAKER

12

www.payscale.com

What are companies compensation

practices and how have they
changed?
Setting Compensation
Who is Responsible for Setting Compensation Budgets?
60%
53%

50%
40%

37%
32%

30%
20%

17%

15%

10%

6%

5%

en

tH

ag
an

rtm

M
De

pa

g
rin

ea

er

p
m
Co
Hi

e
sid
In

He

ad

of

m
Co

tsi

de

m
Ou

m
Co
p
m
Co

HR

e
itte

O
CF

CE

0%

2%

Note: Multiple answers were allowed to be selected for this

question which is why the percentages add up to more than 100
percent.

THE CEO OWNS

THE BUDGET
IN SMALL
& MEDIUM
COMPANIES,
BUT IN LARGE
COMPANIES, ITS
THE HEAD OF HR

Since 2009, the majority of respondents that chose

the CEO as the individual responsible for setting
compensation: at least 50 percent.
The least popular choice in all years was outside
compensation consultant, with 2 percent in 2013,
and 3 percent or less of the responses in 2012 and 2011.

13

www.payscale.com

 The same pattern appeared across most industries and

company sizes, except large companies, where the
head of HR (48 percent) is usually responsible for setting
compensation budgets, while CEOs and CFOs are second
(38 percent and 39 percent respectively).

Compensation Structure
Although the CEO is primarily responsible for setting compensation
budgets, the head of HR is primarily responsible for setting
compensation structures.

Who is Responsible for Setting

Compensation Structures?

PERFORMANCE
WAS THE MAIN
DRIVER FOR
ADJUSTMENTS
IN

60%
49%

50%
40%

41%

30%
23%

20%
14%

14%
10%

10%

OF COMPANIES

5%

4%

54%

en
t

He

ag
an

De
pa
rtm

M
rin
g
Hi

sid
e
In

ad

er

p
m
Co

HR
of

p
m
Co

tsi

de

m
Ou

m
Co
p
Co
m

He
ad

e
itte

O
CF

CE

0%

Almost 50 percent of respondents reported the head

of HR sets compensation structures at their
organization, compared to only 41 percent of CEOs.
This pattern is seen across all industries and medium
to large companies, however, for small companies the
CEO is primarily the one who sets compensation
structures (78 percent).

14

www.payscale.com

Compensation Adjustments
Across all industries, the main reason why companies
adjusted compensation was Performance-Based Pay
Increases (54 percent) and second was Cost of Living
Adjustments (20 percent).
Small-sized companies were more likely to adjust
compensation to encourage retention (11 percent)
compared to medium-sized companies (6 percent) and
large-sized companies (3 percent).

Compensation Objectives
The most important compensation objective guiding
the respondents 2013 decisions was Retaining Top
Employees, which was chosen by 66 percent of
respondents (identical to 2012).
This was true across all company sizes and industries.
The second most common response was Attracting New
Talent, with 11 percent of respondents choosing it as
their primary objective, and 39 percent choosing it as the
second most important objective.
Managing internal pay inequities was the least important
objective, chosen by only 6 percent of respondents as
being a top objective.

Salary Ranges vs. Market Percentiles

Salary ranges per job group are common, but varying
the target market percentile per job group is not.
The majority of companies (79 percent in 2013 and
82 percent in 2012) use salary ranges to structure
compensation programs, while in 2012 and 2013 only
6 percent use broad banding (very wide salary ranges
covering a progression of similar jobs). The remaining
respondents dont use either.
15

www.payscale.com

Compensation Structure by Company Size

Each
Job Has
Its Own
Salary
Structure

By
Grade

Broadband

No
Structure

Small

47%

29%

4%

20%

Medium

31%

50%

7%

12%

Large

19%

61%

10%

9%

Company
Size

The most common way for those who use grades to assign
jobs to grades is to use market data (47 percent). This is
true across company sizes.

Aligning different jobs or categories of employees with

different market percentiles, e.g. 50th for professional

and 75th for executives and key jobs was practiced by 36

percent of respondents in 2013, a slight decrease from

41 percent in 2012. See below for details on the trend by

company size.

RAISES BASED
ON COLA WERE
RARE IN 2013
NEARLY

70%

DIDNT GRANT
THEM

Small companies: 30 percent in 2013 vs. 36 percent in

2012

Medium companies: 39 percent in 2013 vs. 41 percent

in 2012

Large companies: 42 percent in 2013 vs. 51 percent in

2012

Varying the target market percentile per job is uncommon

in most industries as well, except in the Information, Media,

& Telecommunications industry, where 44 percent of

respondents align jobs with different market percentiles.

Overall, 35 percent of respondents last adjusted their salary

structure 0-6 months ago and 28 percent last adjusted their

salary structure 12-24 months ago.

16

www.payscale.com

 This trend is consistent across company sizes, but some

industries such as Healthcare & Social Assistance and
Manufacturing were more likely to adjust their salary
structure in the last 6-12 months (36 percent and 40
percent, respectively).

Cost of Living
Cost of living increases remained rare in 2013. 68 percent
of respondents say that they do not grant them, compared
to 71 percent in 2012 and 69 percent in 2011.

Bonuses: Who Receives Them and What Type?

Bonuses were a popular option for employers in 2013,
with 75 percent of respondents saying they gave variable
pay incentives. In 2012, 71 percent gave bonuses and 70
percent of respondents gave bonuses in 2011.
Among those giving bonuses, the two most likely recipients
were directors and managers (72 percent) and executives
(67 percent).
In 2013, as in 2010, 2011, and 2012, individual incentive
bonuses were the most common type given, with about
half of all respondents reporting they awarded them.
Respondents favored spot bonuses or other discretionary
bonus programs more in small and medium-sized
companies (37 percent and 41 percent respectively) than in
large-sized companies (35 percent).

17

DIRECTORS
AND MANAGERS
WERE MOST
LIKELY TO GET
BONUSES IN
2013

72%

OF THEM DID

www.payscale.com

 Small companies are less likely to offer variable pay

incentives than medium-sized and large companies. The
following lists the percentage of respondents who do not
offer variable pay incentives.
Small Companies: 26 percent
Medium Companies: 23 percent
Large Companies: 20 percent

Types of Bonuses Used in 2013 by Company Size

80%
71%

70%

64%

60%

53%

50%
41%

40%

37%
31%

30%
20%
10%
0%

25%

24%

Retention
Bonuses

27%

18%

14%
10%

24%

35%

8%

Hiring
Bonuses
Small Companies

Individual
Incentive
Bonuses

Team
Incentive
Bonuses

Medium Companies

Spot
Bonuses

60%

PERFORM
MARKET
ANALYSIS ONCE
OR TWICE A
YEAR

Large Companies

18

www.payscale.com

 Information, Media & Telecommunications and

Professional, Scientific, and Technical Services were
the most likely to grant individual incentive bonuses (71
percent and 68 percent of respondents, respectively).

Types of Bonuses Used in 2013 by Industry

80%
71%

70%

68%

67%
60%

60%

59%

53%

50%

44%

40%

38%
33%

30%
20%
10%
0%

22%

20%
13%

22%
12%

14% 14%

Retention
Bonuses

17%
13%

26% 26% 25%

23%

46%

44%
36%

35%

28%

26%

20%

15%

Hiring
Bonuses

12%

Individual
Incentive
Bonuses

Team
Incentive
Bonuses

ONLY

Spot
Bonuses

Finance/Insurance

Healthcare / Social Assistance

Information/Media/Telecommunications

Manufacturing

Professional/Scientific/Technical Services

Other

ARE VERY
SATISFIED WITH
THEIR SALARY
DATA

Formal Compensation Strategy and Market

Analysis
More than 73 percent of respondents either have or are
working on a formal compensation strategy.
The likelihood of having or working on a formal
compensation strategy increases with company size.
Small Companies: 65 percent
Medium Companies: 79 percent
Large Companies: 81 percent
60 percent of respondents said they typically perform
market and compensation analysis annually or bi-annually.
The likelihood of conducting a compensation analysis

19

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at least once a year increases with company size. The

following lists the percentage of respondents who conduct
market and compensation analysis annually or bi-annually:
Small Companies: 57 percent
Medium Companies: 60 percent
Large Companies: 66 percent
43 percent of respondents adjusted their salary structure
within the last 6 months and 23 percent adjusted their
salary structure between 6 and 12 months ago.
50 percent of companies reported using free salary data to
price jobs; 43 percent use a local or regional salary survey;
32 percent participate in a nationwide salary survey; and 24
percent subscribe to an online salary data provider.
62 percent of respondents are somewhat satisfied with
their current salary data, while 26 percent are very satisfied
and 12 percent are not satisfied at all.
Satisfaction increases with company size (34 percent of
large companies are very satisfied while only 23 percent of
small companies report being very satisfied).

Salary Increases
When we asked in 2012, 85 percent of companies said they
planned to give pay raises in 2013, and 57 percent said they would
give raises to at least half of their workforce.
In 2013, 83 percent of companies reported giving raises, and
77 percent gave raises to at least half of their workforce. 55
percent of companies said they spent 0-5 percent of payroll
on base salary increases, and 14 percent said they spent 6-10
percent.
Overall, 17 percent of businesses did not give any pay raises
in 2013, a slight reduction from 19 percent in 2012.
Performance-based pay increases were the driver for pay
raises in 2013, with 54 percent of companies citing it as
the main reason for pay raises, in line with the 56 percent
estimation in 2012.
20

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THE LINK
BETWEEN
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Learn easy steps to create
a strong link between pay
and performance at your
organization.

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 Large-sized organizations were most likely to adjust

compensation for more than half of their workforce; 83
percent of them chose this option compared to 69 percent of
small companies and 81 percent of medium ones.
Small companies were most likely to not give any raises
in 2013; 24 percent of respondents reported this choice,
compared to just 12 percent of medium and large
organizations.
Finance & Insurance and Manufacturing are the industries
with the highest reported rate of giving at least 50 percent of
their workforce pay raises, with 85 percent and 81 percent
response rates, respectively.
Healthcare and Social Assistance companies were least likely
to give raises, with 22 percent of companies reporting no pay
raises, and only 74 percent giving raises to at least half their
workforce.

21

COMPANIES IN
HEALTHCARE
AND SOCIAL
ASSISTANCE
WERE LEAST
OPTIMISTIC
ABOUT 2014
WITH

8%

EXPECTING
WORSE
FINANCIAL
PERFORMANCE

www.payscale.com

OUTLOOK FOR 2014

Companies are optimistic about 2014, with 72 percent
expecting their financial situation to improve (66 percent in
2013), and only 5 percent expecting it to weaken (7 percent in
2013).
People are the most optimistic about their future financial
performance at small companies (75 percent of respondents).
These figures beat out the optimism at large and medium
companies, where 66 percent and 72 percent, respectively,
of respondents indicate they expect their companys financial
performance to improve in 2014, respectively.

40%

2014 Financial Outlook by Company Size

80%

75%

72%

70%

OF COMPANIES
WOULD
SUPPORT A
$10.10 MINIMUM
WAGE

66%

60%
50%
40%
30%

20%

20%

23%

28%

10%
0%

5%
IMPROVE
Small Companies

STAY THE SAME

5%

6%

WEAKEN

Medium Companies

Large Companies

The most optimistic industries are Information, Media,

& Telecommunications (84 percent think their financial
performance will improve in 2014) and Professional, Scientific,
and Technical Services (76 percent).
The least optimistic industry is Healthcare and Social
Assistance (8 percent expect their financial performance will
weaken).

22

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Impact of Government
We asked United States respondents about the implementation of
federal healthcare law (the Affordable Care Act (ACA), colloquially
known as Obamacare) and whether a federal minimum wage
should be raised to $10.10 (as proposed in The Fair Minimum
Wage Act).
In 2012, companies of all sizes told roughly the same story,
with about 75 percent saying they expected no changes

in their staffing plans due to the implementation of federal

healthcare law, 7 percent planned cutting back hours, and 14

percent reported they would hire fewer workers in 2013.

In 2013, 84 percent anticipated no impact on staffing plans, 5

88%

EXPECT TO GIVE
RAISES IN 2014

percent would be cutting back on hours, and 8 percent would

be hiring fewer full-time workers in 2014.

The healthcare industry experienced the biggest change in

their plans between 2012 and 2013, with 77

percent of respondents saying there were no

changes expected (60 percent in 2012), while

7 percent said they would cut back hours (12

percent in 2012), and 12 percent said they would

hire fewer full-time workers (15 percent in 2012).
Response rates for the federal minimum wage

were consistent across all company sizes, with

roughly 40 percent reporting being in favor of the

proposed minimum wage, 30 percent against,
and 30 percent indicating they were unsure or
didnt know.

The responses across industries were more

varied, with Healthcare & Social Assistance and

Professional, Scientific, and Technical Services

giving the highest response in favor (46 percent

and 45 percent, respectively).

Manufacturing was the most against the

proposed minimum wage, with 37 percent

answering against.

23

www.payscale.com

Salary Increases
For 2014, 88 percent of companies intend to award pay
raises, with 77 percent of respondents anticipating the
average raise will be less than ten percent.
83 percent of small companies, 91 percent of medium
companies, and 91 percent of large companies plan to give
raises in 2014.
Among the top five industries, Finance & Insurance have the
highest reported rate of planning to give raises (92 percent),
followed by Information, Media, & Telecommunications (91
percent), and Manufacturing (90 percent).
The average raise in 2014 is expected to be 4.5 percent
Small companies - 4.9 percent.

4.5%
IS THE AVERAGE
EXPECTED
RAISE IN 2014

Medium companies - 4 percent.

Large companies - 4.4 percent.

Workforce Size
Companies plan to continue expanding in 2014 with 54
percent of organizations expecting to increase in size in 2014.
In last years survey, 50 percent said they expected their
workforce to increase in 2013 (38 percent in 2012).

How do you expect your workforce to change in 2014?

(by Company Size)
Change to
Workforce

Small

Medium

Large

Increase

54%

56%

50%

Stay the
Same

42%

39%

42%

Decrease

4%

5%

8%

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 Industries had significant variance in responses, as you can

see in the table below.

How do you expect your workforce to change in 2014?

(by Top 5 Industries)
Change to
Workforce

Increase

Stay the Same

Decrease

Finance &
Insurance

52%

44%

5%

Healthcare & Social

Assistance

49%

47%

4%

Info, Media &

Telecom

73%

24%

4%

Manufacturing

50%

46%

4%

Professional,
Scientific & Tech
Services

64%

30%

6%

Other

52%

43%

6%

MERIT-BASED
PAY AND
LEARNING AND
DEVELOPMENT
ARE POPULAR
RETENTION
STRATEGIES

Employee Retention Remains a Priority for 2014

Regardless of company size, 57 percent of companies feel
employee retention is a high concern or their top concern
in 2014, while fewer than 11 percent say it is a little to no
concern for 2014.
Professional, Scientific & Tech Services and Information,
Media & Telecommunications are the industries most
concerned with retention in 2014, with 65 percent and 70
percent citing it as a high or top concern, respectively.

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 Companies in Finance & Insurance were least concerned with

retention, with 13 percent of respondents saying it was of little
or no concern.
As the graph below shows, companies are focusing on
offering merit-based pay and learning and development
opportunities to attract and retain quality employees in 2014.

Plans for Recruiting and Maintaining High-performing

Employees in 2014
40%
35%

34%

35%

34%
32%

34%

33%

30%
25%
20%

17%
15%

15%
10%

10%

14%

11% 11%
9%
6%

5%
0%

Merit-based
Pay Plan

Non-discretionary
Incentive-based
Pay Plan
Small Companies

Discretionary
Incentive Plan

5%

Stock Option/
Grant Plan

Medium Companies

Learning and
Developmental
Opportunities

NEARLY 2/3 OF
INFO, MEDIA
& TELECOM
COMPANIES
REPORT A
SKILLS GAP

Large Companies

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Hiring Woes
Half of respondents agree with the statement: There is a
lack of qualified applicants for our open job positions.
Medium and large companies were most likely to agree (51
percent), while small companies were slightly less likely to
agree (50 percent).
Nearly 2/3 of Information, Media, & Telecommunications
and Manufacturing companies agree (61 percent each), the
highest of all industries.
Finance & Insurance respondents are least likely to agree,
with only 39 percent experiencing a lack of qualified
applicants.
Large companies are most likely to have positions open for
six months or more; 50 percent have them, compared to 36
percent of medium companies and only 24 percent of small
companies (33 percent overall).
Information, Media & Telecommunications and Manufacturing
were the two most likely industries to have unfilled positions
for at least six months (45 percent and 43 percent,
respectively).

LACK OF
QUALIFIED
APPLICANTS IS
THE TOP REASON
FOR UNFILLED
JOBS

Recruitment difficulties varied by company size, as seen in

the chart below; large companies struggled filling IT positions,
while small companies had the hardest time with Sales.
Overall, both IT and Management were the hardest positions
to fill across the board (with 22 percent and 19 percent,
respectively).

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Tough Positions to Fill by Company Size

35%
31%

30%
25%

25%

24%
23%
21%

20%

19%
17% 17%

15%

15%

16%

16%
14%
12%

10%

10%
8%

8%

7%

9%

10%

9%
7%

6%

6%

5%

5%

Small Companies

ce
an
Fin

er
ne
gi

En

ar

ke

tin

ing

l
ive

ut
ec

Le

ve

les
Sa
Ex

Se
Cu

sto

er

ag
an
M

ice
rv

IT

em

en

0%

Medium Companies

SOCIAL MEDIA
USAGE AT WORK
IS GAINING
ACCEPTANCE

Large Companies

The most popular write-ins were technical/engineering

positions and medical/clinical specialists.
Lack of qualified applicants was the top reason for unfilled
positions (60 percent compared to 61 percent in 2012),
followed by being unable to offer a competitive salary (23
percent compared to 22 percent in 2012). This was broadly
the case for all company sizes and industries.

Employee Reviews and Communication

Most companies reported they conduct performance reviews
(93 percent), although the popularity of performance reviews
decreases with company size (98 percent of large companies,
96 percent of medium, and 88 percent of small companies
report doing performance reviews).

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 Only 46 percent of respondents indicated feeling somewhat

confident their managers could have tough conversations
about compensation with their employees. 27 percent
report feeling not too confident and only 18 percent report
feeling very confident. This trend is seen consistently across
company sizes and industries.
More than half of respondents felt their organization does not
offer manager training to teach them how to talk to employees
about compensation (53 percent). Smaller companies are
even less likely to offer such training (65 percent).
55 percent of respondents reported that they do not offer
Total Compensation Statements to their employees.
Finance & Insurance is more likely to offer Total
Compensation Statements than any other industry (63
percent).

Social Media in the Workplace

Use of Social Media by Employees
More than half of all respondents (55 percent) indicated their
workplace has a formal policy on the use of social media,
slightly down from 56 percent last year (53 percent in 2011).

61%
USE SOCIAL
MEDIA FOR
RECRUITING.
LINKEDIN MOST
COMMONLY

Of companies with official policies, the proportion of

respondents encouraging social media use at work rose to 37
percent in 2013 from 35 percent in 2012 (and 29 percent in
2011).
Similarly, only 33 percent of those companies say the use of
social media is not allowed at all, compared to 36 percent
who said that was the case in 2012 (42 percent in 2011)
indicating a downward trend in control.
The larger the company, the more likely it has a formal social
media policy in the workplace: 49 percent of small companies
have a formal social media policy, compared to 59 percent of
medium companies and 61 percent of large companies.
Small companies were also the least likely to block access to
social media sites. Only 8 percent of small companies with
an official social media policy blocked access to websites,
compared to 17 percent of medium companies and 22
percent of large ones.
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 The Finance & Insurance industry was most likely to have

a formal policy on the use of social media; 74 percent of
respondents in the industry said they had one.

Manufacturing, Information, Media & Telecommunications

industries were the only industries in which less than half of

respondents said they have formal social media policies in
place, with 45 percent and 43 percent, respectively.

For those with a policy in place, Finance & Insurance

and Healthcare & Social Assistance were the strictest, as

47 percent and 46 percent (respectively) of respondents

indicated that the use of any social media was not allowed at
work.

Information, Media, & Telecommunications is the only industry

where a majority of companies with a formal policy actually
encouraged the use of social media at work (54 percent),

although Professional, Scientific & Tech Services companies

were just under that mark at 47 percent.

Social Media as a Recruiting Tool

61 percent of all respondents said they used social media to

RESPONDENTS
CAME FROM
MULTIPLE
COMPANY SIZES,
INDUSTRIES AND
COUNTRIES

help recruit their workforce in 2013.

For those who use social media, LinkedIn was the most

popular website, with 56 percent of respondents saying they

used it as a recruiting tool.

Facebook was the second most popular network, utilized by

29 percent of respondents, and 15 percent used Twitter.

Overall, larger companies were more likely to use social

media for recruiting; 68 percent did so, while only 65 percent

of medium companies and 54 percent of small companies did

so.

In the Information, Media & Telecommunications industry,

77 percent of companies use social media for recruiting, the

highest of any industry. Professional, Scientific, and Technical

Services came in second with 72 percent.

The Healthcare & Social Assistance industry was the least

likely to utilize social media in recruiting at 48 percent.
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SURVEY METHODOLOGY
The Compensation Best Practices survey was conducted in
November and December of 2013. There were 4,738 respondents
to the survey. Survey results were analyzed to create comparisons
between small companies (<100 employees), medium-sized
companies (100 - 1,000 employees) and large companies (1,000+
employees), as well comparisons by industry.

Company Size

21%
44.2%
34.8%

Less than 100

Employees

100-1,000
Employees

More than 1,000

Employees

In addition to representatives from all company sizes, the top

five industry categories represented in the survey were Finance &
Insurance; Healthcare & Social Assistance; Information, Media &
Telecommunications; and Professional, Scientific & Tech Services.

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Top 5 Industries

6.9%

Finance & Insurance

13.2%
7.4%

49.8%

13.1%
9.8%

Healthcare & Social

Assistance
Information, Media &
Telecommunications
Manufacturing
Prof, Scientific
& Tech Services
Other

Respondents came primarily from eight different countries with the

majority (64 percent) residing in the United States and the second
most popular location being Canada (13 percent).

Location

1.4%
.7%
2.5%
.3%
5.7%

United States

10.1%

13.4%
1.5%

Australia
Canada
India
New Zealand

64.4%

South Africa
United Arab Emirates
United Kingdom
Other

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ABOUT PAYSCALE
Creator of the largest database of individual compensation profiles
in the world containing 40 million salary profiles, PayScale, Inc.
provides an immediate and precise snapshot of current market
salaries to employees and employers through its online tools and
software. PayScales products are powered by innovative search and
query algorithms that dynamically acquire, analyze and aggregate
compensation information for millions of individuals in real time.
Publisher of the quarterly PayScale Index, PayScales subscription
software products for employers include PayScale MarketRate,
PayScale Insight, and PayScale Insight Expert. Among
PayScales 3,000 corporate customers are organizations small
and large across industries including Cummins, Zendesk, Clemson
University and Covenant Dove.
For more information, visit www.payscale.com
See the interactive graphs: www.payscale.com/cbpr

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