According to a study by executive search firm Salveson Stetson Group, although the average pay increase executives received when changing jobs has improved since the recession, salaries have not returned to the levels reached in the years leading up to the financial crisis. Since 2010, senior executives who have moved to new companies received a more than 16 percent average increase in total compensation compared to an almost 25 percent increase between 2006 and 2007.
Compared with the increases executives could have expected in the years leading up to the recession, the study of more than 175 senior executives revealed a 56 percent reduction in the total pay increases actually received when switching companies in 2008 and 2009. Salveson Stetson Group analyzed compensation data from every senior executive placement over the last six years.
“The financial meltdown quashed the boosts in pay that senior executives moving into new roles had come to enjoy and expect in a robust economy,” said John Touey, principal at Salveson Stetson Group. “Not surprisingly, as the demand for talent dried up through the depths of the recession in 2008 and 2009, so did the premiums companies were previously willing to pay when hiring new executives.”
Other findings included:
1. The market for talent was big leading up to the recession, which raised salary expectations of senior executives nationwide.
2. The average compensation increase offered to new executive hires from 2008 to 2009 dropped significantly to 11.07 percent.
3. Post-recession salaries have recovered, but not to pre-recession levels.
“But, in an encouraging sign for both the jobs market and the economy, we have seen compensation offers steadily increase for new hires for more than two years now,” said Touey. “For companies to compete for the talent they want, they must be willing to offer attractive pay packages, as candidates are more likely to be fielding multiple offers once again.”