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HEC Releases 2019 Salary Adjustment Survey Summary Highlights

Posted Tuesday, November 12, 2019 6:28 am

The 2019 Salary Adjustment Survey was conducted between June and September 2019.  A total of one hundred seventy-six (176) organizations shaped the results of this year's Survey Report.  Participating organizations provided actual data that reflected the previous 12-month period (7/1/2018 to 6/30/2019) and the next projected 12-month period (7/1/19 to 6/30/2020) by various employee groups,

  • Executives
  • Exempt
  • Office & Technical (non-union)
  • Office & Technical (union)
  • Production & Service (non-union) and
  • Production & Service (union).

Average Pay Adjustments

The average 2019 actual adjustment for Hawaii calculated at 2.9% percent for all employee groups (based on the data submitted by survey participants), while the median calculated at 3.0%, which aligns with the U.S. median. 

The average projected 2020 salary adjustment for all employee groups calculated at 2.6%, with the median calculated at 3.0%, which aligns with the U.S. median. This is the sixth year where salary adjustment median projections for Hawaii are aligned with the U.S.

Formal Pay Structure

An organization's pay structure is a hierarchy of pay ranges with established minimum and maximums. Organizations apply control points (often the mid-point) within each pay range. As a general rule, a percent increase is applied to the control points to adjust the pay structure.

Sixty percent of the organizations utilizing a formal pay structure reported a 2.0% average and 2.0% median adjustment to their structures. The National WorldatWork 2019-2020 Salary Budget Survey Report indicated a national average adjustment of 2.2% and median adjustment of 2.0%. 

Organizations with five hundred or more employees continue to be the significant group having a formal pay structure as noted in the chart below.

Of these organizations with formal pay structures, 53.8% have one formal pay structure, while the remaining 46.2% have more than one formal pay structure.

Market pricing has been the most commonly used method to develop and support compensation structures.  This process is based primarily on external factors with the organizational goal of being market competitive.  While there are the options of traditional, broadbands, step structures, market-based structures and other combinations, over one-third of participating organizations (38.7%) indicated utilizing a market-based salary structure.

Other includes: pure market pricing or based on other combinations.

Since organizations review market data on a regular basis to ensure salary structures and base pay levels remain competitive, participants were requested to share the timing of and organization-wide market analysis.  Slightly over one-half (50.6%) conduct a review on an annual basis, while 38.3% conduct a review every two years, with the remaining 11.1% having a variety of other timeframes.

Lump Sum Payments

The data indicates the use of lump sum payments in lieu of pay adjustments is not a prevalent practice with only 17.0% of participating organizations using this practice. The median lump sum payment provided, calculated at 2.0%.

Performance Incentive Plans

Incentive plans which are paid out annually are the most prevalent for all work group categories.  Overall, 31.5% of the organizations reported that they have a formal performance incentive plan for their Executives, followed by 31.0% for their Exempt employees and 19.8% for their Office & Technical Non-Union employees.

The median percent for incentive awards paid out between 7/1/18 to 6/30/19 was 11.5% for Executives and 8.0% for Exempt and 4.0% for Office and Technical Non-Union employees.

Promotional Adjustment

Nearly forty-five percent of the organizations reported promotional adjustment data.  The median promotional adjustment calculated at 2.0% for the current/actual period and 2.0% for the projected period.  

Base Pay Adjustment Program Types and Dates

The most prevalent base pay program continues to be "Performance-Based/Merit” for all job categories.  Holding the same consistent pattern, the most prevalent practice for when pay adjustments are granted continues to be "Common Date for All Employees” for all job categories.

Base Pay Target Levels

Participants were requested to share benchmark points where an organization would target base pay levels in comparison to the market. The data indicates, for organizations that have a base pay practice, most benchmark at the median (or 50th percentile).  As a reference point, according to a WorldatWork Survey, most organizations aim to compete at the median.

Employee Recruitment and Retention

Attracting and retaining key talent is top of mind for all organizations, and the top four tools utilized by organizations are:

  • Market adjustments / increase to base pay
  • Employee referral bonus
  • Noncash recognition and rewards
  • Sign-on/hiring bonus

Compensation Programs and Practices

In addition to reporting data on salary adjustment, pay structure, incentive and promotional adjustments, participants were requested to provide responses to questions focused around compensation programs and practices and the outcome indicates the following:

  • Salaried Non Exempt

    Slightly over one third (34.1%), of the organizations that participated have jobs and/or employees classified as Salaried Non Exempt. Of these Salaried Non-Exempt jobs/employees, 66.7% are compensated based on an annual salary and the remaining 33.3% are compensated based on an hourly rate.

  • Compensation Philosophy

    The Compensation Philosophy consists of management's understanding of where base pay fits within the organization's business strategy and supports the organization's culture.  It identifies the organization’s market and how competitive the organization wants to be.

    Over half of the organizations have some form of compensation philosophy, 19.9% have a documented philosophy in writing, while 30.7% have an unwritten compensation philosophy

  • Compensation Policy

    The Compensation Policy ensures that a compensation program carries out the compensation strategy while supporting the compensation philosophy.

    Over half of the organizations have some form of compensation policy, 42.0% have a written policy, while 14.2% have an unwritten policy.

  • Performance Rating

    Slightly over half of the organizations (50.6%) reported that pay adjustments are tied to the employee’s performance rating. 

    The levels of performance ratings utilized by organizations center around three through five levels with five levels of performance rating being the most common amongst participants.

  • Effects of Healthcare Cost

    Although rising health-care costs continue to be of concern, most participating organizations (64.8%) report that health-care costs will not impact base pay budget recommendations.

    HEC conducts a variety of compensation and benefits surveys to provide data useful in developing and administering compensation and benefit plans, and personnel policies.  Custom snapshots and comparison reports from our compensation surveys are available, along with customized, proprietary surveys conducted on your behalf.  Our Survey & Compensation experts can also work with members on employee opinion surveys to identify gaps between being an employer of choice and being merely an employer.  For more information, please contact Cathy Keaulani, Survey & Compensation Services Manager (ckeaulani@hecouncil.org), or Susan Amuro, Survey & Compensation Analyst (samuro@hecouncil.org).

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