Only top-performing employees will see much bigger pay hikes.
If a 3% raise sounds familiar, there’s a good reason. It’s the same pay increase most salaried employees got in 2014 and 2015, and can expect again this year. Next year, it seems, will be no different—save for the best-performing employees, whose salaries are going up by 4.6%, or about 77% higher than the 2.6% increase given to average-performing employees.
“Virtually all (98%)” of U.S. employers plan to hand out raises in 2017, according to a new survey of 967 companies by compensation consultants Willis Towers Watson.
But they’re “holding the line” on the size of their compensation budgets because of “continued low rates of inflation and ongoing pressure on profit margins,” notes Laura Sejen, managing director of the firm’s rewards practice.
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Bonuses, too, will “stay steady or decline slightly” for most employee groups in 2017, the report says, averaging 11.6% of salary both this year and next. An exception: so-called discretionary bonuses, awarded for special projects or one-time achievements, will show a tiny uptick, from 5.3% of salary to 5.6%.
Giving juicy pay increases to top-rated employees is, of course, one way companies are trying to retain talent they can’t afford to lose. Workers whose performance is below par, on the other hand, are seeing a not-so-subtle message in their paychecks. Their raises, this year and in 2017, the survey found, will average a measly 1% or less.