U.S. employers are feeling humane, but not particularly generous.
A survey of 967 companies by Willis Tower Watson found that the average employer is planning on giving employees a 3 percent raise this year.
The good news, at least for those concerned about the U.S.'s yawning income gap, is that it does not appear that the modest pay increases are because of companies diverting the pay hikes to the C-suite. Executives are only set to receive an average pay raise of 3.1 percent, the survey found.
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Granted, salary does not take into account other common forms of executive compensation, such as bonuses and equity, which are often responsible for the enormous divide between those at the top of the organization and rank-and-file employees.
Meanwhile, bonuses will remain flat or decline among the companies surveyed. The small raises do not appear to be the result of bigger bonuses, however. The amount that employers plan to spend on performance-based bonuses is similar to last year. The average bonus will be 11.6 percent of salary, the survey found.
On the issue of bonuses, the survey focused only on employees whose salaries are high enough to exempt them from mandatory overtime pay.
Employees who receive top performance ratings can expect an increase of 4.6 percent, while those who are rated as average performers will see an average hike of 2.6 percent.
Just as the annual performance review and the annual employee appraisal have come under fire from some management reformers, the idea of setting pay on an annual basis is also facing scrutiny.
"While most companies are feeling little pressure to increase budgets relative to what we've seen in recent years, many are starting to question how those budgets are spent and whether their conventional approaches to salary planning are delivering a good return on that 3 percent investment," said Laura Sejen, managing director of the "Rewards" division at Willis Towers Watson, in a statement. "In fact, some employers are challenging the use of the annual cycle, while others are changing the criteria for determining the amount of individual increases."
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