If you're budgeting 3 percent raises for the majority of your workforce, you're in good company, because 3 percent is the new pay raise standard.
That's what an annual compensation survey by Towers Watson reported. Those who make the annual salary decisions are planning to hand out 3 percent raises to most employees next year — the same amount budgeted for 2015 and for 2014. Meantime, company recruiters are asking the spending planners to give them more flexibility in recruiting and retaining top talent as the battle for all-star performers continues to rage.
The wage differential for executives and nonexempt salaried and hourly isn't much: executives should look for a 3.1 percent raise in their first paycheck in 2016, compared to 3 percent for the troops. Just about every company (98 percent) is planning on giving raises next year.
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"To a large extent, 3 percent pay raises have become the new norm in corporate America. We really haven't seen variation from this level for many years," said Sandra McLellan, North America practice leader, Rewards, at Towers Watson. "While most organizations are finding the talent they need at current salary levels, we are seeing more employers prioritizing how their salary budgets are being spent, especially in light of their ongoing difficulty in attracting and retaining top performers or employees with critical skills."
Other survey highlights:
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Exempt workers who received the highest performance ratings were granted an average salary increase of 4.6 percent this year, about 77 percent larger than the 2.6 percent increase given to workers receiving an average rating. Workers with below-average performance ratings received salary increases of less than 1 percent.
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More than eight in 10 exempt employees (85 percent) received a bonus this year, up from 81 percent in 2014. Meanwhile, 87 percent of exempt employees were eligible to receive an annual or short-term bonus this year, up slightly from 86 percent last year.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
