A survey conducted in November/December by Empsight International LLC of 142 Fortune 500 and large multinational corporations regarding forecasts of 2011 salary merit increases, bonus payouts and hiring, suggests cautious optimism.

Hiring expectations showed a significant improvement over 2009, with 39 percent of companies expecting headcount increases of 1 percent to 5 percent, and 18 percent expecting reductions of the same amount. The corresponding figures in last year's edition of the survey were 21 percent and 26 percent. Retail, professional services and technology companies showed the strongest hiring forecasts. The greatest impediments to hiring were seen as:

  • The broader economic outlook (49 percent of responses)
  • Level of demand for company products and services (36 percent of responses)
  • Government regulations (8 percent of responses)
  • Health care costs (7 percent of responses)

"While there is an active societal debate on health care, this survey shows economic fundamentals are a more significant driver of hiring decisions," stated Vincent McHugh, managing director of Empsight International LLC.

Survey numbers, which are detailed in the link below, show salary merit budgets forecasted at 3.0 percent at median, compared to 2.6 percent in the same survey in 2009. The number of companies planning merit increases was 98 percent of the total compared with 94 percent in last year's edition of the survey. Of the 11 industry group breakouts, the oil/gas/services industry group recorded the highest average merit increase, at 3.24 percent, while the insurance industry the lowest at 2.37 percent.

Seventy-eight percent of companies expect to pay annual cash bonuses at the same or higher levels than last year, with 27 percent, at the executive level, expecting payouts somewhat or significantly higher. Ninety percent of companies expected their long-term incentive awards to be about the same or somewhat higher.

Employee retention, employee morale, cost of benefits, compensation competitiveness, and managerial skill levels continue to register as somewhat to very significant concerns for companies. These factors will increase in importance if there is significant growth in the economy.

The survey was conducted between November 18 to December 8, 2010 by Empsight International, a compensation survey and consulting firm focused on Fortune 500 and large multinational companies.

Full survey results available for download at http://www.empsight.com/spotsurveyresults.