The HR consulting firm Buck Consultants reports that employers are more likely to hand out bonuses than increase salaries for 2010. 

The survey report, “Recovery, Restoration and Retention: 2010 Compensation Trends,” finds that 58% of companies plan to award bonuses that are within five percent of last year’s amounts, while 21% expect to make bonus payments that are five percent or greater than their 2009 payments. The survey is based on the responses from 180 employers.

The results suggest that employers “may have ended the year with earnings performance that was strong enough to meet or exceed their targets,” says Tom Burke, director at Buck Consultants. “Those targets may have been at levels that were the same as, or even less than, prior targets,” he adds.

Burke goes on to explain that companies will reward top-performing workers “who made it through downsizing and have been asked to do more.” In addition, employers are more apt to pay out bonuses, which are variable costs, rather than to raise base salaries, which increase fixed costs. This includes benefits that are tied to salaries.

The survey also reveals that salary increases for 2010 will average 2.2%, a figure that is greater than the 2009 average, but slightly less than the 2010 forecasts made by employers in a prior poll conducted in July 2009.

“Overall, economic conditions appear to be improving slowly. We’re seeing a gradual lifting of pay freezes and hiring freezes. Companies that implemented salary cuts are restoring salaries in most cases,” Burke says. “Employers realize the importance of reinvesting in their workforces as the economy shows signs of recovery. At the same time, they are being cautious so they are in sync with business performance.”

Other key findings include:

• One-third of survey participants report making changes to the way they measure or reward the performance of their employees.

• Thirty percent of the survey participants indicate they plan to use market-based salary adjustments to retain their top performers.

• More than 95% of survey participants say they have no plans to expand or implement bonuses for attracting and retaining employees despite widespread reports about growing worker dissatisfaction.

Follow EBN on: Twitter | Facebook | LinkedIn | Podcasts