Fewer companies are planning to freeze pay next year - about 6% compared to 17% that froze salaries this year. Base salaries are expected to rise slightly. Still, the anticipated increase will be smaller than in the 1990s, when paychecks typically grew by more than 4% annually.

Going two years in a row without a pay increase can hurt employee morale, however, so companies are finding other ways to incentivize their better performers. With many employers yet to see a robust rebound in business, watching payroll expenses is still important. About 60% of companies still give across-the-board raises, but many companies are switching to the pay-for-performance model that includes merit raises.

Performance appraisals are becoming more demanding, and employees are increasingly being graded on a curve, compared to others doing similar work. Only "outstanding" ratings will receive raises. Some companies are rewarding top performers with stock options, but companies are receiving pressure to account for options as expenses, so they may become less likely to use this method in the future.

To keep employees' spirits up in lieu of raises, companies are doing things like allowing more casual dress days or shortened summer hours. Another tactic is one-time cash awards or snazzier titles with no pay increase; in other words, to motivate employees without spending a lot of money doing it. Ambitious employees aren't only concerned with money. They want jobs that not only compensate them well, but also provide opportunities for advancement and the chance to learn new skills.