Slightly larger pay boosts, bonuses in employers’ 2019 budgets
As employers struggle to retain talent, top-performing employees saw the biggest raises this year.
The tight job market means that employers are willing to part with “slightly larger” pay raises and “modestly larger” discretionary bonuses when the calendar ticks over.
That’s according to a new survey by Willis Towers Watson, which also found that in their quest to hang on to top-performing employees, bosses also gave those workers the biggest raises this year.
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The 2018 General Industry Salary Budget Survey, conducted by Willis Towers Watson Data Services, finds that next year, U.S. employers intend to reward their non-management (professional) exempt employees with average pay increases of 3.1 percent in 2019; this year they handed out pay raises of 3.0 percent.
Nonexempt hourly employees will also be in for raises that are a tad larger than this year: 3 percent in 2019, compared with 2.9 percent in 2018. Executives are in for slightly smaller raises, 3.1 percent compared with 3.2 percent, and levels won’t change for either management employees (3.1 percent) or nonexempt, salaried employees (3.0 percent).
Pay increases have lagged in the neighborhood of 3 percent for the past 10 years, and only 3 percent of companies intend to freeze salaries next year. The last year in which raises were significantly larger was back in 2008, when they were around 3.8 percent.
Bets are off when it comes to high performers, however; according to the survey, companies are still rewarding “star” performers at a notably higher percentage than “average” performers. Those with top marks in their evaluations got an average raise of 4.6 percent in 2018; that’s 70 percent higher than average-rated employees, who got 2.7 percent raises.
Oh, and those discretionary bonuses, the ones handed out for special projects or one-time achievements? Those are expected to average 5.9 percent of salary for exempt employees next year, more than the ones handed out this year. In addition, slightly larger discretionary bonuses are planned for managers and salaried, nonexempt employees. Annual performance bonuses, usually dependent on company and employee performance goals, are expected to hold steady or even fall slightly in 2019 for most employee groups.
“A growing number of companies are coming to grips with the fact that employees are more willing to change companies to advance their careers and to talk openly about their pay,” Sandra McLellan, North America Rewards business leader at Willis Towers Watson, says in a statement. She adds, “As a result, organizations are facing increased pressure entering next year to devise a focused strategy and plan on how to allocate their precious compensation dollars or risk losing some of their best talent.”