3% annual pay raise is the new norm - Towers Watson
By Staff Writer
America's rank-and-file will on average receive a 3% base pay increase next year, according to a study. That is the same as the average raise in 2015. And while it may not be much, that still beats inflation which was at 0.1% in June.
What has changed is the number of companies giving a raise. Professional services firm Towers Watson says of the 1,100 mostly large employers it has surveyed only 1.9% have no plans of giving a raise. That is fewer compared to 3% this year. In 2009, amid a financial crisis, almost a third of companies gave no raises at all.
"To a large extent, 3% pay raises have become the new norm in corporate America. We really haven't seen variation from this level for many years," said Sandra McLellan, North America practice leader of Towers Watson Rewards.
The salary bump depends upon worker performance. Towers Watson says top performers will receive the biggest raise at 4.6%. Average performers will get 2.6%, and those below average, less than 1%.
"We are seeing more employers prioritizing 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," said McLellan.
Of course, workers will be taking home more, as most big companies are going to give out bonuses, aside from the raise.
On average, executives will get a bonus payout of 17.4% and managers, 8%. Non-managers exempt from overtime will receive 4.9%, while those eligible for overtime, 4.1%. Hourly workers stand to get 3.7%.
The survey also shows 87% of employees exempt from overtime are eligible for annual or short-term bonuses this year. That's slightly higher than last year's 86%. But still, it means some will not be receiving incentives.
If you want to make sure you get that coveted bonus or salary increase, there are a number of things you can do.
You can join internal social networks to make yourself more visible to your boss. Also try to make a good impression on people closest to your boss through projects and events. These influencers can put in a good for you.
Most of all, have a record of your contributions and achievements. You can present this to your boss during performance reviews. Be sure to explain how you have benefited your company. "If you save the company $1 million, it seems a little stingy of them to deny you an extra $20,000," Dorie Clark, author of "Stand Out," told CNBC.
And once you have succeeded in getting the financial reward, use it wisely. You can invest some of the money for your retirement fund or use it to pay debts. "Use that to get ahead instead of letting it evaporate by spending it all on unplanned purchases," Bruce McClary, a spokesman for the National Foundation for Credit Counseling, told CNBC.