Is your management team ready to pump up employee raises in the coming year? If not, you’ll be swimming against a national tide, according to a new survey.
More than 98% of companies plan to award base pay increases in 2011, according to HR consulting firm Mercer. The average increase is expected to be 2.9% in 2011, up from an actual 2.7% in 2010 — but still down from 2009 levels, when the average was 3.2%.
And it looks like the wage-freeze era has ended. Just 2% of companies are planning across-the-board salary freezes next year, compared to 13% in 2010 and 31% in 2009, according to Mercer.
The focus is on performance
Companies appear to be segmenting their workforce and rewards based on performance.
Thus, there’ll be a significant gap between raises for high-performing employees and those in the lower-performing categories next year. According to Mercer, the highest-performing employees (14% of the workforce) can expect to receive average base pay increases of 4.3% in 2010. Average performers (35% of the workforce) will get 2.6% and the weakest performers (7% of the workforce) will be in line for a paltry 0. 5%.
Levels vary across industries
Compared to the expected average pay across-the-board pay hike of 2.9% in 2011, organizations within high-performing industries plan to grant higher increases. Here’s a rundown of which sectors will pay more next year:
- Oil and gas — 3.5%
- Business/professional services — 3.2%
- Utilities/energy — 3.0%, and
- Hospitality/restaurant — 3.0%.
At the bottom of the list: Education (2.6%) and real estate (2.5%).