More than 98 percent of companies plan to increase base pay in 2011, but focus more on rewarding the highest-performing employees, Mercer says in its 2010/2011 US Compensation Planning Survey.
"Moreover, just 2 percent of companies are planning across-the-board salary freezes next year compared to 13 percent in 2010 and 31 percent in 2009," Mercer said.
Average pay hike, among employers planning to grant base pay increases, is 2.9 percent for 2011, Mercer said. That's up from an actual 2.7 percent in 2010, but down from 2009's 3.2 percent.
The highest-performing employees (14 percent of the workforce) are expected to receive average base pay raises of 4.3 percent in 2010. That compares to 2.6 percent for average performers (35 percent of the workforce), and 0.5 percent for the weakest performers (7 percent of the workforce).
"It looks like salary raises are back and for good reason," Catherine Hartmann, a principal with Mercer's rewards consulting business, said. "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."
Hartmann said employers' focus on top performers is "a necessity, allowing employers to make their investments on those employees that will advance the organization in the new economy."
Oil and gas is expected to be among the top-yielding industries, Mercer said. Projected average percentage pay raises by industry:
- Oil and gas: 3.5
- Pharmaceutical: 2.9
- Utilities-energy: 3
- Banking: 2.7
- Business and professional services: 3.2
- Retail: 2.8
- Telecom: 2.9
- Education: 2.6
- Healthcare: 2.8
- Hospitality and restaurant: 3
- Real estate: 2.5
Mercer's survey includes responses from 1,100 mid and large-size employers nationally and reflects pay practices for 12 million workers.
- Scott Nishimura, jobs and workplace reporter, Star-Telegram