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University of Massachusetts Amherst

Family Business Center

Question on Pay Raises You're Planning for 2010

Question from a Western Mass Business Owner, and several answers from others

QUESTION: (a) What has your company budgeted for wage increases in 2010? (b) What will be the timing and criteria for allocating increases? (c) Will bonuses be paid? Or, (d) will some other type of increased wage/benefit be considered?

ANSWER 1: My answers are: (a) 2-4% raises (b) Depends on cashflow (c) Not sure yet but cuts in benefits likely (d) Timing will be in the fall. Bonuses will be sooner based on cash flow and performance. Western Mass Web Designer

ANSWER 2:(a) Nothing in the budget. We feel we have to budget conservatively, hoping for growth but planning on being flat. We'll see how we do, and if we do great, we'll give bonuses and maybe some raises. We'll see. (b) What will be the timing and criteria for allocating increases? Timing: We take a look at the half year mark and see where we are. Criteria is Profits. (c) Will bonuses be paid? Depends on goals being met, and profits. (d) Our industry is constantly changing, like many, and 6 months is a long time for us. We will consider what makes the most sense. Western Mass Distributor with under 10 employees.

ANSWER 3: For non-management wage increases, we've budgeted between 4-5% total, distributed unequally. Salaried management personnel receive no increase again this year. Bonuses were common in the past, but not for the last 2 years. If business continues to increase and our new plans take hold, we hope to return to days of greater prosperity for all. Western Mass Manufacturer

ANSWER 4: We are a construction company with 30 plus employees. Our company historically has an annual salary review (and raises) at the end of April before our busy season. Because of the state of the economy last year, 2009, we did not give out any raises. In fact, all managers were required to take a 10% pay cut. Half of the cut was returned during the third quarter, but the managers are still 5% behind. The construction economy has still not recovered so raises are not a consideration. One has to make decisions that are in the best interests of the company. The employees will be happier if the company survives and prospers and provides them a continued place of employment. The head needs to make these decisions, not the heart. Of course this situation varies by businesses. If your industry and company is doing well, then share the good results. Western Mass Builder

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