While everyone else is in back-to-school mode these days, in the world of HR, August means one thing—time to start thinking about pay adjustment projections for next year.
“What did we give this year?”
“What should we budget for next year?”
“What is everyone else projecting?”
“Will this be enough to stay competitive in the market?”
“Who should get what to make sure we retain our top talent?”
Although these questions may seem daunting, the answer, or at least the benchmark number from which many employers base their base salary budgeting process, has become fairly straightforward and predictable in recent years.
According to the 2015-2016 ERC Wage & Salary Adjustment Survey of 136 Northeast Ohio employers, in 2015 the average base pay adjustment was 3.0%, with the same number, 3.0%, projected for 2016.This figure is hardly surprising, as both actual and projected base pay increases haven’t varied from this 3.0% by any more than one-tenth of a percent over the past three years. In addition, 2016 marks the fourth consecutive year in which 95% or more of the participating employers reported they were planning to provide increases to their employees.
Consistency can also be seen in the national numbers, which continue to fall right in line with ERC’s survey results.
For example, WorldatWork recently revised both their actual and projected pay adjustments as well as their salary budgets up to 3.0% and 3.1%, respectively.
Many economists argue that despite a declining unemployment rate and strong job creation numbers, on the whole, economic indicators simply have not yet put enough pressure on employers to warrant any significant wage growth above and beyond this 3.0% threshold.
Of course these figures only account for base pay, with merit-based increases gaining ground as employers look to more of a “pay for performance” model. So although base pay increases can provide a solid, consistent starting point for both employers and employees, employers should keep in mind that retaining top performing talent at their organization may require additional financial incentives beyond the basic 3.0% annual raise.
View ERC's Wage & Salary Adjustment Survey Results
The survey reports data from Northeast Ohio organizations regarding their actual and projected wage and salary adjustments.