[Go here for 2014 data and the rest of the survey results]
2015 Merit Increases
A mere 13.8% (down from 14.1% in 2013) of survey participants have decided and/or approved their pay budgets for 2015, leaving 86.3% undecided as of the end of June.
Of those who have decided, on average across all employee types, 14.3% (down from 17.8% last year) of the employers expect to offer 2015 merit increases of up to 2.5%, 48.8% plan no increase, 41.7% (up from 29.6% last year) plan to offer merit increases of 2.5–5%, and 5.2% (up from 3.5% last year) plan to offer increases above 5%.
The breakdown of employee types shows 14.9% of employers plan merit increases of up to 2.5% for senior management, 18% plan that amount for management, 13.6% plan it for nonmanagement salaried exempt employees, 12.5% plan the same for hourly office employees, and 12.4% plan to award up to 2.5% of base pay as an increase to hourly nonoffice employees. Among employers planning merit increases for 2015, the most common amount is 2.5–3% for exempt nonmanagement employees and 3.01–3.50% for senior management, management, and hourly nonoffice employees.
2015 General Increases
Of those who have decided their pay budget for 2015, on average across all employee types, 16.9% (down from 22.2% last year) of the employers expect to award general increases of up to 2.5%, 15.5% (down from 17.2% last year) plan to offer general increases of 2.5–5%, 5.5% (up from 4.2% last year) plan to award above 5%, and 62.1% (up from 56.5% last year) plan no general increase.
The breakdown of employee types shows 17.2% of employers plan merit increases of up to 2.5% to senior management, 18.4% plan that amount for management, 16.1% plan it for nonmanagement salaried exempt employees, 17.4% plan the same for hourly office employees, and 15.1% plan to award up to 2.5% of base pay as an increase to hourly nonoffice employees. Among employers planning general increases for 2015, the most common amount is 2.51–3% for exempt nonmanagement employees, management, and hourly employees. It is 2.01–2.50% for senior management.
2015 Maximum Individual Increases
Approximately 7.5% of survey participants indicated their plans for maximum individual increases in 2015. Of that group, on average, 16.5% plan to award a maximum increase of up to 2.5% and 31.4% plan a maximum of 2.51–3% as their individual increase while an average of 14.9% plan 5.01–10% of base pay, and 4.6% plan more than 10% of base pay. At 12%, senior management employees are the largest employee group receiving individual increases of more than 10%.
2015 Rate Range Adjustments
Of the 7.1% of survey participants that answered the question, on average across all employee types, 59.6% (down from 61.9% last year) plan no rate range adjustments for 2015, 23.5% expect to adjust their rate ranges by up to 2.5%, 13.1% expect to make adjustments of 2.51–5%, 2.5% plan adjustments of 5.01–10%, and 1.3% plan adjustments above 10%.
2015 Bonuses
A little under 7% of those responding to our survey provided information regarding their plans for bonuses in 2015. Of those who did, on average across all employee types, 6.3% plan to offer bonuses of up to 2.5% of base pay and 12% plan to offer 2.5–5%. Another 6% plan bonus amounts in 2015 of 5.01–10% and bonus amounts of over 10% are planned for an average of 13.3% of the survey participants who answered this question. Though 4.9% (down from 7.9% last year) plan to award bonuses in lieu of pay increases, 42.6% (up from 34% last year) will award bonuses in addition to salary increases, and 23.9% plan some of both depending on employee type.
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Pay Practices
The most important factors that affect pay increases include performance (33.5%), company profits (28.3%), and competitors’ wage rates (7.5%). Coming in at 0.4%, department or division is the least common factor affecting raises.
The criteria our survey participants use to determine rate range adjustments include survey of benchmark jobs at 53.8%, company profit at 18.1%, inflation rate at 6%, and consumer price index and company history at 5.4% and 5.2%, respectively.
When it comes to assigning a salary range for a new position, our survey participants use a variety of methods. For example, 65.7% compare the new position to other positions within the company and 59.3% research location, industry, and position salary data. Only 23.8%, however, consider the chosen applicant’s previous salary.
Our survey participants use a wide range of sources for salary data, including:
- Trade associations, 21.5%
- Consultants, 15.4%
- Bureau of Labor Statistics, 11.1%
- Salary.com, 9.4%
- BLR, 4.6%
- Economic Research Institute, 3.9%
- Online recruiters, 2.7%
- O-Net Online, 2.6%
- Other, 28.8%
HR professionals fulfill many roles when it comes to setting raises. For example, 7.4% of survey participants who answered this question help supervisors with tough pay decisions and 37% play a major role in deciding the companywide level for raises. Each department’s raises are reviewed by 7.2% and 6.2% approve each employee’s salary increase. Employee raises are determined by 2.4% and 19.1% play no role in setting raises at their organization.
To address employee retention problems, 57.6% evaluate their pay scale/rate range levels to ensure market competitiveness and 33.2% evaluate employees for flight risk, addressing pay issues at the individual employee level. No compensation-related problems are the norm for 17.8% of survey participants.
Participants and Demographics
A total of 1,130 individuals participated in this survey, which was conducted in June 2014. Of those who identified themselves, 56.2% are private for profit, 24.2% are private not-for-profit, and 19.6% are public sector.
Companies with 1–250 employees are represented by 60.9% of survey participants and organizations with 251–500 employees account for 13.5%. Employers with 501–1,000 employees are represented by 9.2% of survey participants, those with 1,001–5,000 are represented by 10.7%, and organizations with more than 5,000 employees are represented by 5.6% of survey participants.
A hefty 45.3% have a workforce that is 1–25% exempt as defined by the FLSA, 25.6% have a workforce that is 26–50% exempt, and 23.4% have a 50–100% exempt workforce. Only 11.5% of survey respondents have a workforce of more than 50% union employees.
Over half (60.7%) of the participants are in service industries; 21.6% are in agriculture, forestry, construction, manufacturing, or mining; 7.9% are in wholesale, retail, transportation, or warehousing; 2.9% are in real estate or utilities; and 6.9% are in public administration.
Staff-level employees account for 13.9% of the survey participants who self-identified. Supervisors account for 3.5% and managers account for 33.8%. Director-level employees account for 29.6% and vice president or higher round out the field at 19.3%.
Thanks again to all who participated! Here is some more detailed information:
Thanks again to everyone who participated!
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