The forecasts are in, and the anticipated average market increase for pay in 2017 is 3%!
Surveys and analysis performed by such organizations as World at Work, Economic Research Institute (ERI), Willis Towers Watson, The Conference Board, Aon Hewitt, and Hay Group led each group to the same conclusion. Also, the variation based on the level of incumbent, size of employer, or type of industry was negligible – rather, average pay increase budgets for 2017 are 3% across the board.
Market increases have been pretty steady for the past few years, and multiple economic factors influence 2017’s numbers including low inflation, profit margin pressure within organizations, and the fact that declining unemployment rates haven’t yet impacted the labor market in such a way that organizations are driven to adjust their salary budgets.
While the overall average has been steady, the allocation of funds is shifting to focus more on the top performers. Tom McMullen, Hay Group’s North American total rewards expertise leader, stated that, “We typically see top performers in organizations receiving between 1.5 times and two times the median salary increase for employees… So top performing individuals could expect to receive salary increases upwards of 6% to 8%.”
According to the Willis Towers Watson survey, “exempt employees who received the highest performance ratings were granted an average salary increase of 4.6% this year…Companies gave salary increases of less than 1.0% to workers with below-average performance ratings.”
To make the most of your increase budget this year, keep these strategies in mind:
- Focus your strategy on rewarding high performers
- Plan ahead to distribute the budget pool properly
- Align rewards with company strategic planning initiatives
- Pay close attention to the pay of employees who are lagging the market
Want more information? Check out these great articles, or reach out to HRG! We can help strategize when it comes to merit planning, structure movement, or any other type of compensation-related challenge!
- ERI: https://www.erieri.com/infographic/globalsalaryincreaseprojectionsfor2017
- Willis Towers Watson: https://www.willistowerswatson.com/en/press/2016/08/us-companies-holding-the-line-on-pay-raises-for-2017
- World at Work: https://www.worldatwork.org/adimLink?id=80643
- Hay Group: http://www.businesswire.com/news/home/20160804005344/en/What%E2%80%99s-3-Percent-Base-Salary-Increases-Forecasted
- Aon Hewitt: http://aon.mediaroom.com/news-releases?item=137470
- The Conference Board: https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=7254