Across the nation, salaries are going to go up in 2014. But don’t panic – the increase is going to be far lower here in the USA than in many other countries
Companies across the nation should expect the labour market to tighten slightly next year: salaries for 2014 look like they will inch up on 2013 by about 3%.
The average projected increase in companies’ salary budgets was 3%, slightly higher than the 2.9% this year and 2012's 2.8% (as measured by Sibson Consulting).
“As long as organizations maintain confidence in their financial forecasts and there is general stability in the global economy, this trend [of increasing salaries] is likely to continue," Sibson Consulting's Jason Adwin said, adding that the only way salary increase forecasts could be derailed would be by concerns over the economy lingering longer than expected, government-influenced instability (eg future government shutdowns), uncertainty regarding tax policy, and continued high unemployment.
The Sibson results line up with a July study that compiled salary budget data from 16 nations and predicted a 3.1% increase for the US. The WorldatWork analysis also found that, internationally, Indian and Chinese companies are planning for the biggest salary increases – 10.9% and 8.5% respectively.
Even in countries with slower salary growth, it is clearly important for HR departments to demonstrate other ways of rewarding and retaining staff. "Organizations continue to be challenged in finding meaningful ways beyond 3% raises to reward talent," said WorldatWork's senior compensation practice leader, Kerry Chou.
Four ways to retain staff without a raise
US companies are increasingly using compensation techniques that are a little more creative than straight raises:
- Bonuses When budgets allowed, cash bonuses were offered to high-performing workers in areas such as sign-ons, project completion, and retention
- More frequent adjustments In recent years, adjustments to base salaries outside of standard periods have doubled: in 2013, 72% of companies offered these kinds of raises, compared to 35% in 2010
- Variable pay Incentives were popular in 2013, with 91% of eligible staff given variable pay, such as profit sharing and performance-based compensation
- Differentiation based on performance In 2013, companies motivated staff by offering high performers an average of a 4.1% pay increase, while middle performers could expect just 2.7%