Rest assured you’re using the most reliable comp data
Earlier this year, as the pandemic was unfolding, Mercer and other vendors were asking you to participate in salary surveys. In response, we heard from some clients — and even some of our own consultants — that first quarter data was not going to be useful when planning for 2021. There was a hypothesis that organizations would be reducing pay and/or reducing the size of their workforce in light of the down economy later in the year and that data collected in March and published in the summer wouldn’t reflect those changes. We heard these concerns and sprang into action!
In June we launched an additional round of survey data collection, a “refresh” for our core surveys. To minimize the administrative burden on participants, we focused only on key data elements, and provided a single click option for participants to let us know that their data hadn’t changed.
We were pleasantly surprised with the results — in short, you can confidently use Mercer’s 2020 survey data when planning for 2021. Here’s why …
Participation remains strong
During our traditional survey cycle (i.e., participation in February or March, Q1) we saw great participation from clients, which signaled to us that organizations did still understand the value of 2020 surveys! In fact, for our largest survey, US Mercer Benchmark Database (MBD), saw an increase in participation overall! Participation for this survey, which is a cornerstone for market pricing for many organizations, actually grew by 4% over the previous year!
Current, reliable data
We know you rely on Mercer surveys as you go into end-of-year planning, so we didn’t want to delay publication. While we did see an encouraging level of participation in the traditional survey cycle, Mercer was committed to making sure that our data was as up-to-date as possible, and reflected any changes made later in the year, while still publishing our surveys on time.
For US MBD, over 600 of the original participants responded and the majority of those indicated “no change” — meaning they didn’t need to resubmit data because what they submitted earlier in the year was still valid.
Current, reliable data … confirmed
To tell you the truth, we weren’t all that surprised by the fact that not many organizations wanted to submit new data.
In addition to the salary survey data refresh, we also launched a series of Compensation Planning pulse surveys this year. We pulsed clients monthly, April through July, modifying the questions each time to ensure we were collecting what you needed to know.
In April we heard that 83% of participants had already finalized salary increase budgets prior to the pandemic (mid-March). Of those, 68% implemented their salary increases as planned. Timing is everything. Had the effect of COVID-19 hit us in January, we might have seen employers react differently and may now be seeing differences in the data.
In a subsequent pulse survey, we asked whether organizations had reduced salaries — 75% indicated they had not. With this knowledge, we were fairly certain that the pay data reported in Q1 had not (yet) changed — and the response to our data refresh was confirmation.
Future actions
Unlike the recession in 2008/2009, employers were provided with various incentives to not take the knee-jerk reaction of cutting pay and staff this time. Along with the CARES act and other government provided incentives, many organizations realized that those actions were significant contributors to the slow, difficult recovery in the past. This time, there appears to be more recognition of how critical it is to make careful decisions when it comes to talent. You in Human Resources are leading the way to help CEOs and CFOs find their way out of this.
Though we’re pleased to see that the majority of companies did not cut pay up until now, with the deadlines for employee retention expiring, we do anticipate employers to make more permanent pay cuts or layoffs in order to steel their businesses for the long-haul.
It’s likely that we’ll see a much more interesting story in surveys published in 2021. Stay tuned.
Use your 2020 data
What does all this mean? It means that as you plan your salary increase budget for 2021, you can confidently rely on your 2020 Mercer survey data.
While there are some nuances to particular jobs or industries that show up in the refresh, on the whole the 2020 Mercer surveys reflect the going rate of pay that you will need to use to gauge how competitively you are paying.
But, unemployment is way up, why do you have to measure competitive pay? Well, in the likely event that you are going to have a restricted salary adjustment budget this year, you’re going to want to understand a few things:
- What are the critical roles that will lead your organization into the future?
- Who are the high-performing employees that you need to retain at all costs?
- How are you paying both of these employee groups?
By answering these three questions you will be prepared to help your managers allocate funds in the most impactful way. Prepare for this now.
You can rely on Mercer’s data. We’ve got your back.
Do you have additional questions? Give us a call at 855-286-5302.