You may be thinking of keeping salaries trim but according to Watson Wyatt, companies are planning to raise pay an average of 3.5%. This still doesn’t keep up with inflation, which rose 5% in June alone. For now, with the weakening economy, many workers are staying put. As long as pay cuts aren’t taking place, workers are willing to put up with a raise that doesn’t quite match the cost of living.
The one thing to keep in mind is not to cut back too much. Your staff knows what employee benefits and compensation is available to them. Once the economy starts to recover, workers that feel that they are getting the short end of the stick won’t be as willing to stick around as workers who know their company went out of the way to offer them a decent raise with a good employee benefits program. Don’t fall into the pitfall, thinking your employees will stay with you indefinitely. If you can afford it, try to keep ahead of the compensation and employee benefit trend.