New Survey: 98% of Companies Plan to Give Raises Next Year

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Aug 3, 2010

It may be only August, but here’s a good reason to look forward to next year: a new Mercer survey says that “more than 98 percent of companies plan to award base pay increases in 2011.”

According to Mercer’s 2010/2011 US Compensation Planning Survey, employers are approaching salary increases for next year in a cautious manner (just as they did in 2010) with the emphasis on engaging and retaining top talent as the economy continues to slowly improve.

One key difference from the past 24 months: just 2 percent of companies are planning across-the-board salary freezes next year compared to 13 percent of organizations in 2010, and 31 percent in 2009.

“It looks like salary raises are back and for good reason,” said Catherine Hartmann, a principal with Mercer’s rewards consulting business said in a press release accompanying the survey results.

“The risk of losing key employees is top of mind as the economy recovers and certain labor markets improve. And while non-monetary awards such as career development and training are effective in retaining employees, employers realize that top-performing employees are loathe to going another year without an increase in pay. Investments in both cash and non-cash solutions will have a significant impact” on avoiding a post-recessionary exodus.

Mercer, which bills itself as a leading global provider of consulting, outsourcing, and investment services, has conducted the survey on compensation trends annually for more than two decades. The research includes responses from more than 1,100 mid-size and large employers across the U.S., and reflects pay practices for more than 12 million workers. The survey results reflect five categories of employees: executive, management, professional (sales and non-sales), office/clerical/technician, and trades/production/service.

The Mercer survey also found the same range in projected salary increases for 2011 that other recent surveys have found. Of the employers projecting to grant base pay increases, the average increase is expected to be 2.9 percent in 2011, up from an actual 2.7 percent in 2010 but still down from 2009 levels (a 3.2 percent average).

But unlike past years, expected salary increases for 2011 are even across most employee groups, however more employers are taking a segmented approach and continue to focus on giving a more generous overall increase to high-performing talent.

“In the tug of war between limited resources and the need to retain critical employees, recognizing top performance is still clearly a driving factor,” Hartmann said. “Differentiating salary increases among employee groups is a necessity, allowing employers to make their investments on those employees that will advance the organization in the new economy.”