Nearly 75% of U.S. companies expected to reach or exceed their performance goals by the end of 2010. As a result, payroll projections stabilized heading into the New Year, according to recent studies.
That’s good news for workers, as salary increases are projected to be between 2.7% and 2.8% for the four main employee classifications — salaried exempt workers, executives, salaried non-exempt workers and hourly workers.
Those figures are up from 2.4% in 2010 and much higher than the record-low raises workers saw in 2009 (1.8%), according to a recent Aon Hewitt survey of more than 500 employers.
More good news: None of the companies surveyed by Aon said they plan to cut pay in 2011, and only 11% plan to freeze salaries for salaried exempt and non-exempt workers.
Helping to bolster the findings from the Aon survey, Sibson Consulting’s research shows that salary increase budgets will increase to between 2.5% and 2.7% in 2011.
Focusing on top talent
The improving economy isn’t the only reason for the positive pay projections.
Employers are now making a play to hang on to their best workers — fearing that top employees will bolt for greener pastures as the economy improves.
So, many companies are planning base salary increases and bonuses almost exclusively on performance.
According to a Mercer study, for example, employers plan to structure employees’ salary increases as follows:
- the highest-rated workers will receive pay increases averaging 4.3%
- average workers will receive a 2.6% salary bump, and
- the lowest-rated employees will receive a 0.5% increase.
The message employers hope this sends to workers: Only the most deserving employees can expect sizable financial rewards moving forward.
Do these results mirror what your company has planned? Share what your company’s projecting to do this year in the Comments Box below.