Companies are increasingly having “additional increase budgets” that can deal with market or pay equity adjustments. (Photo: Shutterstock)
Unemployment may be low and companies concerned about employee turnover, but that doesn’t mean that they’re willing to fork over more money to keep workers happy.
That’s among the findings of Mercer’s 2019/2020 US Compensation Planning Survey, which drew on data from some 1,300 corporations to determine that company budgets for both 2019 and projected 2020 merit increases are pretty consistent with what employers have done over the past five years, at 2.9 percent and 3.0 percent, respectively.
While budgets for average total increases have shifted slightly upward, the report finds that the rise includes merit increases, cost of living adjustments, across-the-board increases, promotional increases and additional increases.
Companies are increasingly having “additional increase budgets” that can deal with market or pay equity adjustments. In 2019, those total increase budgets came to 3.5 percent, while for 2020 the projected average total increase budget is likely to be 3.6 percent. But merit increase budgets for nonunion employees come in at an average of 2.9 percent for 2019 and a projected 3.0 percent for 2020.
(Source: Mercer)
Interestingly, while all groups of employees did get a year-over-year promotional increase, with the average received by an individual going up by 1.5 percent, the overall promotional budget amount has actually dropped a bit. Average promotion salary increases, as a percent of base pay, came in at 9.3 percent, and ranged from 8.3 percent for support personnel to 11.1 percent for executives.
And employee performance figures into the equation, with 90 percent of organizations—a shade more than last year—relying on how an individual performs to determine any changes to base salaries. In 2018, just 88 percent of organizations did so.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
