Compensation Trends for 2012

By Ayo Mseka

Workers can expect modest pay raises averaging 2.8 percent next year, compared to 2.7 percent in 2011 and 2.9 percent in 2010, according to a survey by Buck Consultants.

The survey, Compensation Planning for 2012, also found that pay-for-performance remains as crucial as ever, given the importance of effectively allocating budgets to retain top performers. Eighty percent of respondents have a pay-for-performance philosophy, although this is down from 87 percent last year.

“Our research into pay practices reveals that most employers plan to hold the line similar to 2011,” says Stephen Mork, principal at Buck Consultants. “Given the slow economic recovery and stubborn unemployment rate, organizations are taking a cautious and conservative approach to compensation planning to stay within their payroll budgets.”

Average promotion increases range from 5.7 percent (for C-suite employees) to 7.3 percent (for the vice-president level). A blend of stock options and full value awards (time- and performance-based restricted stocks) remain the most prevalent long-term incentive awards for C-suite employees. Broad-based employee groups are most likely to participate in time-based restricted stock plans.

Buck’s survey found that organizations’ top talent-related priorities for 2012 are retention of talent (62 percent) and employee engagement (56 percent). Actions for retaining top performers include new career-development opportunities (64 percent), market pay adjustments (43 percent), larger base pay increases (30 percent), increased non-cash recognition (28 percent), and larger bonus opportunities (21 percent).

Other survey findings:

  • Fifty-two percent of organizations offer a hiring or retention bonus to employees with specialized industry or product knowledge.
  • Referral bonuses are offered by 56 percent of employers. More than three-quarters of respondents who provide these bonuses cite a better chance of getting a strong performer.


Buck Consultants completed its survey in August 2011. The survey includes responses from more than 280 employers, representing virtually every sector of the U.S. economy. News and information about Buck Consultants are available at