18.2% of respondents are awarding merit increases (averaged
across all employee types) of up to 2.5% in 2014 and 46.1% are awarding
increases of more than 2.5%.
21% of survey participants awarded an increase of 2.51–3%
for “Meets requirements” and 12.9% awarded that amount for “Exceeds
requirements.”
The biggest challenge for respondents is “economy/revenue
uncertainty.”
The results of BLR’s 2014–2015 Pay Budget Survey show 18.2%
of employers awarding merit increases (averaged across all employee types) of
up to 2.5% in 2014 and 46.1% awarding increases of more than 2.5%, with 4.6%
awarding increases above 5% of base pay.
The breakdown of employee types shows 15.2% of employers
awarded merit increases of up to 2.5% to senior management, 17.5% awarded that
amount to management, 17.3% awarded it to nonmanagement salaried exempt
employees, 20.3% awarded the same to hourly office employees, and 20.7% awarded
up to 2.5% of base pay as an increase to hourly nonoffice employees. Among
employers awarding merit increases in 2014, the most commonly awarded amount is
2.5–3%. On average, 35.7% (down from 38.1% in 2013) of responding employers
withheld merit increases in 2014.
A peek at the maximum increase tied to a performance scale
of 1–5 shows that 21% (up from 19.9% in 2013) of survey participants awarded an
increase of 2.51–3% for a score of 2.01–3 (meets requirements) and 12.9% (down
from 17.4% in 2013) awarded that amount for a score of 3.01–4 (exceeds requirements).
A score of 4.01–5 (far exceeds requirements) resulted in merit increases of
4.51–5% of base pay for 11.1% of survey participants.
At the other end of the scale, 90.2% (down from 95% in 2013)
of survey participants did not reward employees who failed to meet the
requirements of their jobs and 60.2% didn’t reward employees needing
improvement. Of those who did, however, 2.7% awarded up to a half percent of
base pay for employees who failed to meet requirements and 7.7% awarded a
half-percent increase to employees who need improvement.
General increases in 2014 are comparable to merit increases,
with 19.1% of employers awarding (on average) up to 2.5% in 2014 and 22.7%
awarding increases of more than 2.5%, with 2% awarding increases above 5% of
base pay.
The breakdown of employee types shows 15.9% of employers
awarded general increases of up to 2.5% to senior management, 19.1% awarded
that amount to management, 18.9% awarded it to nonmanagement salaried exempt
employees, 20.6% awarded the same to hourly office employees, and 21.1% awarded
up to 2.5% of base pay as an increase to hourly nonoffice employees. On
average, 58.2% (down from 62.5% in 2013) of responding employers withheld
general increases in 2014.
An average of 12.8% awarded 2.51–3% as their maximum
individual increase, though an average of 5% of survey participants awarded
more than 10% of base pay. At 14.5% each, hourly office and nonoffice employees
were the largest employee groups receiving the former and, at 9%, senior
management was the largest group receiving the latter.
On average, 21.1% of employers responding to our survey made
adjustments of 2.5% or less to their exempt employee rate ranges and 16% made
adjustments of 2.51–5% to that same group. Also, 2.1% made adjustments of
5–10%, while an average of 1.3% adjusted their exempt ranges by 10% or more. An
average of 59.2% made no adjustment to exempt salary ranges in 2014.
For hourly office workers, 24.4% of the responding employers
made rate range adjustments of 2.5% or less and 15.8% made adjustments of
2.51–5%, while 1.7% increased the rate range by 5–10%. An adjustment of over
10% was made by 0.6% and 57.5% made no adjustment to their hourly office
employees’ rate ranges.
A little over 21% of the responding employers made rate
range adjustments of 2.5% or less to their hourly nonoffice workers and 16.2%
made adjustments of 2.51–5%. Rounding out this group, 1.1% of employers made
rate range adjustments of 5–10% while 0.4% made adjustments of over 10% and
60.2% made no adjustment to their hourly nonoffice rate ranges.
2014 Biggest Challenge in Determining Increases
When asked to describe their
biggest challenge in determining 2014 salary increases, 41.1% (down from 46% in
2013) of survey participants cited budget constraints as the issue. Myriad
other challenges were also noted, including:
- Economy/revenue uncertainty, 13.5%
- Finding usable market data, 9.4%
- Maintaining competitiveness, 8.4%
- Performance management, 8.2%
- How to fairly allocate the increase pool, 5.5%
- Getting senior management approval/buy-in, 4.1%
- Healthcare reform and increasing benefits costs, 3.9%
- Unrealistic employee expectations, 1.8%
While 5.2% of survey respondents offered bonuses in lieu of
raises, 45.5% (up from 41.9% in 2013) paid bonuses in addition to salary
increases and 17.6% (down from 19.3% in 2013) awarded some of both depending on
employee pay type in 2014.
On average, 46.3% paid bonuses to their exempt employees in
2014, with 16.6% offering amounts of 5% or less and 29.7% awarding amounts
greater than 5%. In comparison, 31.8% of those surveyed awarded bonuses to
their hourly office workers, with 22.2% offering 5% or less and 9.7% awarding
amounts greater than 5%. Hourly nonoffice workers were awarded bonuses by
27.3%, with 20.5% offering 5% or less and 6.7% awarding amounts greater than
5%.
A look at the details reveals that 30% of survey
participants paid their senior management team members bonuses above 10% of
base pay and 18.9% awarded the remainder of their management team members at
that level, while 6.7% awarded their nonmanagement exempt employees bonuses
above 10%. At the other end of the spectrum, 29.9% awarded their hourly office
employees bonuses of up to 10% and 25.9% of our survey participants awarded
their hourly nonoffice employees bonuses of up to 10% of their base pay.
2015 Issues and Challenges
The wage-related issues
survey participants expect to have at the end of 2015 include:
|
Trying to keep up with
competitors’ wage rates
|
40.5% (up from 27% last
year)
|
|
Dealing with budget
constraints
|
18% (down from 24% last
year).
|
|
Impact of the Affordable
Care Act and rising benefits costs
|
6.9% (down from 13% last
year).
|
|
Maintaining company
profitability and/or an uncertain revenue stream
|
8.8%
|
|
Achieving internal equity
|
1.9%
|
Source: HR
Daily Adviser
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