Employers Reserving Highest Raises for Top Performers

August 3, 2010 (PLANSPONSOR.com) - According to Mercer’s 2010/2011 US Compensation Planning Survey, more than 98% of companies plan to award base pay increases in 2011.

In addition, just 2% of companies are planning across-the-board salary freezes next year compared to 13% in 2010 and 31% in 2009.   

A Mercer news release said of the employers projecting to grant base pay increases, the average increase is expected to be 2.9% in 2011, up from an actual 2.7% in 2010, but still down from 2009 levels (3.2% average). Unlike past years, expected salary increase levels for 2011 are even across most employee groups, however more employers are taking a segmented approach to salary increase allocations and continuing to focus on high-performing talent.  

The gap between high-performing employees and those in the lower performing categories is widening significantly, according to Mercer’s survey. The highest-performing employees (14% of the workforce) are expected to receive average base pay increases of 4.3% in 2010 compared to 2.6% for average performers (35% of the workforce) and 0.5% for the weakest performers (7% of the workforce).  

Despite salary increases being lower than what has been experienced in recent years, variations do also exist among industry sectors. Compared to the expected average pay increase of 2.9% in 2011, organizations within high-performing industries plan to grant higher increases.   

The Oil and Gas industry is among the highest with projected average pay increases of 3.5% followed by the Business/Professional Services industry at 3.2%. In contrast, other industries expect to award less in 2011, including Education at 2.6% and Real Estate at 2.5%.  

For more information or to purchase the full report of Mercer’s 2010/2011 US Compensation Planning Survey, visit http://www.imercer.com/cps or call 800-333-3070.