Salary Budget and Structure growth rates expected to remain flat for 2018 (3.0% and 2.1% respectively)

While it may be surprising that salary rates have not grown in last several years despite: minimum wage increases, an improving jobs market (US now near full employment), and recent fed funds rate increases …. The pundits say the lack of change is due to combination of the following:

A “new employment deal” … more emphasis on work environment and variable compensation to attract and retain, versus past reliance on base salaries ….interesting side note – use of retention bonuses is up significantly (up 10% since 2013 to 53% usage).
More conservative practices – The recession forced organizations to use much more conservative pay practices, which they are maintaining as are still able to attract sufficient talent.
Minimum wage changes may not be reflected in reported salary budget increases.

Paying for Performance – At same time, compensation dollars continue to be focused on key roles and high performers

High performers average merit increases (4%), were 48% higher than mid-level performers.
Organizations continued to increase use/reliance on variable compensation and other programs to differentiate high performers. Variable pay use increased to 85% with most prevalent type of program being based on organization/unit success and individual performance. Note – approximately 80% of eligible employees earned variable pay in past year.

We hope these research based insights into expected compensation practices for 2018 are helpful to your planning efforts. As we can assist your compensation and/or other Human Resource planning, please do not hesitate to let us know.

The Best in 2018!