Don’t expect a big raise next year, survey says
About that pay raise next year: Don’t expect much of a bump in salary, and bonuses may be hard to come by as well, except for those perceived as high performers by their corporate overlords.
Salary increases are expected to be nearly flat next year at 3%, up slightly from 2.9% in 2017, according to an annual salary survey released this week by Aon. Meanwhile, the amount of money companies are allocating to bonuses is expected to decline slightly to 12.5% of payroll.
“Given that we have a strengthening economy, very strong job creation, corporate results are very strong, it’s a little bit puzzling that we’re not seeing pressure on these numbers to try to push them upwards,” said Ken Abosch, compensation leader at Aon Hewitt, a consulting division of Aon.
Although companies are remaining tight with salary increases, they are working harder to weed out the slackers and reward top performers, with more than two-thirds of employers taking action to increase merit pay differentiation in 2018, according to the report.
“We’re seeing organizations taking a little bit more of a courageous approach to channeling the dollars they have to the individuals who are contributing the most,” Abosch said.
The report, which surveyed 1,062 U.S. companies, found most cities in line with the projected 3% salary increase but found higher-than-average bonus pay increases in Houston, New York and Philadelphia.
California is expected to see a 3% increase in salaries but lower-than-average spending on bonuses at 10.2%, Aon said.
Salary increases vary by industry, with those in automotive, accounting and telecommunications expected to do better than most. Poor-performing industries include education and construction.
Abosch said employees can improve their chances of a raise by choosing an industry that is “more aggressive” in compensation, but no less important is simply signing on with a successful company, which generally “throws off funding” to employees of all levels.
The most important factor may be the hardest to control, however, he said.
“You want to be in a place where you are perceived to be a very strong contributor, a high performer, with the hope that you will be able to get a bigger portion of the salary increase and bonus pie,” Abosch said.
