Profit-sharing Featured

11:04am EDT July 31, 2002
Companies in the midst of a recession aren't likely to dole out huge raises or bonuses, but even with an economic downturn, Northeast Ohio business have remained somewhat optimistic.

According to the 2002 SBN/ERC Workplace Practices survey, local business owners are planning on budgeting pay increases, albeit small ones.

The survey showed the average increase in base pay projected for hourly workers and salaried workers is 3.1 percent, down .9 percent from last year's survey.

The survey also found that the average hourly wage went up 8 cents from last year's average of $8.30, not surprising considering what the local and national economy have been through in the last year.

Patti Flauto, a consultant for the Employers Resource Council (ERC), says the average hourly wage and general pay scale of Cleveland companies are in line with national numbers.

"They (local companies) are paying what the market pays ... and sometimes more," she says.

Flauto says the average cost-of-living increases locally for the past few years "have been about 4 percent and hovering."

But even 4 percent is unrealistic for some companies, and the problem comes when profit-sharing bonuses aren't there. Flauto says there is often a disconnect with employees who don't understand that yearly bonuses are tied into the company's overall profits.

"The problem is they have this bonus plan, and now employees expect it," she says. "They don't understand it is tied into the profit."

Flauto stresses that to get the most out of any bonus program, bonuses should be the result of measurable goals.

"Employees should not just get this check at the end of the year and not know why," she says.

Although that may not be a problem when times are good, it is when times are bad. If that's the cause the key is communication. If times are bad and bonuses are not forthcoming, Flauto says, "It should never be a surprise to the employee."

Employees tend to rely on year-end or quarterly additions to their paychecks and unfortunately, she says, "they may have already spent that money." How to reach: Employer's Resource Council, (216) 696-3636 or www.ercnet.org