With unemployment rapidly declining, and job market tightening, employers are looking to hold onto their employees. Increasing salaries with raises and bonuses is a popular retention tactic. Top performers can expect to see a big raise and “modestly larger” discretionary bonuses as retention tools in 2019, according to a new survey by Willis Towers Watson.
The survey found that an overwhelming majority of respondents are planning to give employees raises next year, with salaries for exempt non-management employees, as well as management and non-exempt workers to increase by approximately 3 percent, the highest in the past 10 years. Executives, meanwhile, are expected to see a pay increase of 3.1 percent in 2019, which is slightly lower than 2018.
Variable pay, such as bonuses are increasingly being used as recognition and reward tools, especially as the job market continues to improve and tighten.
In terms of performance-based increases, the survey reveals that exempt employees who received the highest performance ratings were granted an average salary increase of 4.6 percent in 2018, versus a 2.7-percent hike for workers receiving an average rating. Star performers could receive a raise that is 70 percent larger than their average colleagues.
Annual performance bonuses, which are typically tied to company and employee performance goals, are projected to hold steady or decline slightly for most employee groups next year. However, the good news is that discretionary bonuses, which are typically awarded for special projects or one-time slam dunks, are expected to average 5.9 percent of salary, a slight increase from 2018.
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To read the full survey, please visit https://www.willistowerswatson.com/