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August 02, 2016
2016-2017 Pay Budget Survey - Highlights

Conducted in May, the survey provides data from 555 participants on 2016 increase amounts for senior management, management, exempt non-management, hourly office, and hourly non-office employees, as well as the increase amounts being budgeted for next year and the most common increase amount by performance level.

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2016 Merit Increases

This year’s BLR Pay Budget Survey is practically a replay of last year’s survey with 17.9% (up from 16% last year) of employers awarding merit increases of up to 2.5% (averaged across all employee types). And, 41.8% (down slightly from 42.5% last year) are awarding increases between 2.51% and 5%. Another 4.1% (4.4% last year) are awarding increases from 5.01 to 10% of base pay, and a mere 1.6% (1.5% last year) are awarding more than 10% merit increases.

A closer look at the data, by employee type, reveals that 14.7% of employers awarded merit increases of up to 2.5% to senior management, 16.7% awarded as much to employees at the management level, and 17.6% awarded it to non-management exempt employees. 20.8% awarded the same, however, to hourly office employees, and 19.9% awarded up to 2.5% of base pay as an increase to hourly non-office employees.

At an average of 19.1% across all employee types, 2.5-3% is the most commonly awarded amount among employers awarding merit increases in 2016. Leaving the other 80% scattered all over the place.

Continuing the trend of recent years, on average, across all employee types, 30.2% (down from 31.2% in 2015, 35.7% in 2014, and 38.1% in 2013) of responding employers did not award merit increases in 2016. The breakdown on that number shows that an average of 14.2% awarded $0 and 16% selected N/A.

A peek at the maximum increase tied to a performance scale of 1-5 shows that 20% of survey participants awarded an increase of 2.51-3% for a score of 2.01-3 (meets requirements) and 11.8% awarded that amount for a score of 3.01-4 (exceeds requirements). A score of 4.01-5 (far exceeds requirements) resulted in merit increases of 4.51-5% of base pay for 13.8% of survey participants.

At the other end of the scale, 90.8% of survey participants did not reward employees who failed to meet the requirements of their jobs and 63.3% didn’t reward employees needing improvement. Of those who did, however, 9.8% awarded from .01-5% of base pay to employees who failed to meet requirements and 36.7% awarded increases within that same range to employees whose performance needs improvement.

2016 General Increases

General increases in 2016 are comparable to merit increases with 20.9% of employers (on average) awarding up to 2.5% and 20.5% awarding increases of 2.51-5%. Another 2.7% are awarding increases of 5.01-10% of base pay and .8% handing out raises above 10%. A general increase of2.5-3.0% is the most commonly offered amount.

The breakdown of employee types shows 18.5% of employers awarded general increases of up to 2.5% to senior management, 19.8% awarded that amount to management team members, 20.8% awarded it to non-management salaried exempt employees, 21.8% awarded the same to hourly office employees, and 23.4% awarded up to 2.5% of base pay as an increase to hourly non-office employees.

On average, across all employee types, 52% of responding employers did not offer general increases in 2016. The breakdown on that number shows that 21% awarded zero and 31% selected N/A.

2017 Merit Increases

A mere 8% of survey participants have decided and/or approved their pay budgets for 2017, leaving 92% undecided as of the end of May.

Among employers planning merit increases for 2017, the most common amount is 2.5-3% across all employee types.

Of those who have decided, on average across all employee types, 12.3% of employers expect to offer 2017 merit increases of up to 2.5% and 39.1% plan to offer merit increases of 2.5 to 5%. An average of 1.4% plan merit increases from 5% to 10% and .6% plan to go over 10%. An average of 44.6% plan no increase (12.3% plan to award 0% and 32.3% selected N/A).

The breakdown of employee types shows 9.4% of employers plan merit increases of up to 2.5% for senior management, 10.8% plan that amount for management, 12.7% plan it for non-management salaried exempt employees, 13.6% plan the same for hourly office employees, and 15% plan to award up to 2.5% of base pay as a raise for hourly non-office employees.

2017 General Increases

Of those who have decided their pay budget for 2017, on average across all employee types, 17.9% of the employers expect to award general increases of up to 2.5%, 15.9% plan to offer general increases of 2.5 to 5%, 1.1% plan to award from 5% to 10%, and .1% plan to award general increases of above 10%.

Among employers planning general increases for 2017, the most common amount is 2.51-3% for all employee groups (senior management, management, exempt non-management, and all hourly employees.) At 49.3%, roughly half don’t provide general increases and 14.4% provide them but are budgeting 0% for 2017.

The breakdown of employee types shows 16.2% of employers plan general increases of up to 2.5% to senior management, 16.7% plan that amount for management, 17.7% plan it for non-management salaried exempt employees, 18.7% plan the same for hourly office employees, and 20.2% plan to award up to 2.5% of base pay as a general increase to hourly non-office employees.

You can find a complete analysis of all the survey data, including 2016 and 2017 bonuses and variable pay, here.

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