98% of US employers plan pay rises for 2016

Almost all (98%) of US-based respondents are planning pay increases for their staff in 2016, according to research by Towers Watson Data Services.


The survey of 1,116 US employers, published in August 2015, also found that executives and management can expect average increases of around 3% in 2016. 

The research also revealed:

  • Respondents project an average salary increase of 3% for exempt non-management staff in 2016, the same as the increase received in 2014 and 2015.
  • Respondents are planning a 3% salary increase for non-exempt salaried and non-exempt hourly employees in 2016. 
  • Exempt workers who received the highest performance ratings were granted an average salary increase of almost 5% this year, 77% higher than the 3% increase given to workers receiving an average rating.
  • 85% of exempt employees received a bonus this year, up from 81% in 2014.
  • 87% of exempt employees were eligible to receive an annual or short-term bonus in 2015, compared to 86% in 2014.

Sandra McLellan, North America practice leader, rewards, at Towers Watson, said: “While most organisations are finding the talent they need at current salary levels, we are seeing more employers prioritising how their salary budgets are being spent, especially in light of their ongoing difficulty in attracting and retaining top performers or employees with critical skills.

“We’ve seen many employers make dramatic changes to their approach to performance management, including eliminating formal performance reviews or taking a ‘ratingless’ approach to reviews. Many organisations are rethinking whether linking base salary increases primarily to last year’s performance makes sense or if this should be the role of short-term incentive and bonus programmes.

“It’s no longer all about base salary. While our research consistently shows the importance of pay when employees decide to stay or leave an organisation, we also know their decisions are not just about the money. Opportunities for career development, learning development and challenging work are top drivers of retention.

“It’s the value of the total package; compensation, benefits and non-monetary rewards, that makes the difference. As a result, organisations are paying closer attention to understanding how employees value these elements.”