The results are in from Mercer’s 2019/2020 US Compensation Planning Survey, and even with a competitive labor market and increasing concerns over turnover, companies still appear to be holding the line on salary increase budgets.
Interestingly, average merit increase budgets for 2019 and projections for 2020 are largely consistent with the past five years, at 2.9% and 3.0% respectively. Mercer will further explore these results in follow-up pieces, incorporating insights from its proprietary research databases and client experience.
Here are the key findings from our 2019/2020 US Compensation Planning Survey to help you understand the key trends as you head into salary budget planning season.
1. Understand What is Impacting Total Budget Increases
Average total increase budgets have shifted upwards according to this year’s US Compensation Planning Survey. The total increase budget includes merit increases, cost of living adjustments, across the board increases, promotional increases and additional increases. This uptick is primarily driven by an increase of organizations having 'additional increase budgets', which oftentimes are to account for market or pay equity adjustments.
The average total increase budget in 2019 was 3.5% and the average projected total increase budget in 2020 is 3.6%.
However, when we look at the traditional review of the research, merit budget increases for non-union employees averaged 2.9% in 2019 and are projected to be 3.0% in 2020.
2. Consider Where Promotional Increases Occur
All employee groups saw a year-over-year promotional increase, with average promotion salary increases (as a percent of base) at 9.3%, ranging from 8.3% (Support) to 11.1% (Executive). However, while the promotional budget amount has slightly decreased, the average promotion salary increase received by an individual has increased by 1.5%.
3. Differentiate Base Pay by Performance
Organizations continue to differentiate base pay by performance. In fact, 90% of organizations still use individual performance to drive base salary adjustments, which is up slightly from 2018 (88%).
About this Report:
Mercer’s US Compensation Planning survey is the largest and most comprehensive US salary increase survey available. More than 1,300 organizations provided data for the 2019-2020 survey from April to May of 2019. The full report provides additional analysis on salary increase budgets by industry and employee performance level. Purchase the full report here.