For Year End 2016 – 2017, the median base pay increase for employees is projected to be 3.0% across almost all industries. This will mark the 5th consecutive year that pay increases have held around the 3.0% increase mark.
- Pay structures/ranges (as distinguished from actual pay) are expected to be increased by 2.1%.
Base pay increases tied to individual performance (“pay for performance” or “merit increases”) remain the cornerstone of compensation plans. With this in mind, it remains very important for organizations to be able to accurately differentiate individual performance levels.
Doing so necessitates having in place a comprehensive & effective Performance Management System (PMS). That means a system that encompasses goal setting, competencies & regular feedback, rather than only a formal appraisal once per year.
However, survey data shows that only a small percentage of organizations have such a PMS in place:
- 95% of managers are dissatisfied with their organization’s PMS.
- 90% of HR folks think their performance appraisal process produces inaccurate results.
Research shows that companies’ pay practices continue to:
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- Be inclined to withhold an annual increase for employees who are not performing at a better than average level
- Sometimes granting a lump sum amount (“bonus”) as an offset to an annual increase—especially for those employees who pay is at the higher end of the pay range for their positions
- Provide top performers/key contributors with a substantially greater increase
On average, almost twice the normal percentage increase - Grant larger increases to positions that are “hot” in the market place
- Use variable pay in the form of annual incentive compensation based on a combination of company performance & individual performance
For all of their employees — not just executive & management level ones
If your organization needs help with designing or refining its Performance Management System or its compensation strategy & related plans, Trinity’s Team of talented Consultants has the expertise to do so.
- For more information, e mail Trinity at info@TrinityHR.net or visit our website at www.TrinityHR.net.
You have HR challenges…Trinity has solutions!