U.S. companies holding the line on pay raises for 2017, Willis Towers Watson survey finds
August 24 2016 - 09:05AM
Pay raises for U.S. employees are expected to hold steady at 3% in
2017, according to a survey by Willis Towers Watson (NASDAQ:WLTW),
a leading global advisory, broking and solutions company. The
survey of 967 U.S. companies also found that employers continue to
reward their best performers with significantly larger pay raises
as they look for ways to keep their top talent and strengthen their
pay-for-performance cultures.
The survey, conducted by Willis Towers Watson Data Services,
found that virtually all respondents (98%) are planning to give
employees raises next year, with salaries for exempt (i.e.,
professional) nonmanagement employees to increase 3.0%.
That’s the same increase they received in each of the past three
years. Employers are also planning 3.0% average salary increases
for management and nonexempt employees. Executives can expect
slightly larger raises — 3.1% in 2017, although those are smaller
than the average increase executives received this year and in
2015.
“Given the continued low rates of inflation and the ongoing
pressure on profit margins, employers remain cautious when it comes
to budgeting salary increases,” said Laura Sejen, managing
director, Rewards, at Willis Towers Watson. “While most companies
are feeling little pressure to increase budgets relative to what
we've seen in recent years, many are starting to question how those
budgets are spent and whether their conventional approaches to
salary planning are delivering a good return on that 3% investment.
In fact, some employers are challenging the use of the annual
cycle, while others are changing the criteria for determining the
amount of individual increases.”
According to the survey, exempt employees who received the
highest performance ratings were granted an average salary increase
of 4.6% this year, about 77% larger than the 2.6% increase given to
employees receiving an average rating. Companies gave salary
increases of less than 1.0% to workers with below-average
performance ratings.
The survey also found that annual performance bonuses, which are
generally tied to company and employee performance goals, are
projected to hold steady or decline slightly in 2017 for most
employee groups. Exempt employees are projected to receive bonuses
that average 11.6% of salary, roughly the same amount companies
budgeted for this year. Conversely, discretionary bonuses,
generally paid for special projects or one-time achievements, are
projected to increase slightly compared to bonuses awarded last
year. Discretionary bonuses for exempt employees are projected to
average 5.6% of salary, slightly more than the 5.3% average bonus
awarded in 2015.
“Incentives tied to individual and company performance continue
to play a greater role in an employee’s total rewards package.
Unlike salaries, incentives are variable and give employers much
greater discretion in rewarding employees for performing at
superior levels. During times when employees have greater
opportunities to seek employment elsewhere, employers need to
evaluate their total rewards strategies and programs to ensure
their top employees don’t take their skills elsewhere,” said Sandra
McLellan, North America practice leader, Rewards, at Willis Towers
Watson.
About the survey
The Willis Towers Watson Data Services Salary Budget Survey was
conducted between April and July 2016, and includes responses from
967 companies representing a cross section of industries. The
survey report provides data on actual salary budget increase
percentages for the past and current year, along with projected
increases for the next year.
About Willis Towers Watson
Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory,
broking and solutions company that helps clients around the world
turn risk into a path for growth. With roots dating to 1828, Willis
Towers Watson has 39,000 employees in more than 120 countries. We
design and deliver solutions that manage risk, optimize benefits,
cultivate talent, and expand the power of capital to protect and
strengthen institutions and individuals. Our unique perspective
allows us to see the critical intersections between talent, assets
and ideas — the dynamic formula that drives business performance.
Together, we unlock potential. Learn more at
willistowerswatson.com.
Media contact
Ed Emerman: +1 609 275 5162
eemerman@eaglepr.com
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