Raises Expected to Remain Steady for All but Star Employees

Companies increasing budgets for discretionary bonuses
A woman negotiates a raise

If you’re the boss’s pet, you may be able to cash in on a lucrative raise next year. But if your job performance is closer to average, you may not be so lucky, a new survey suggests.

The good news is most companies — 96% — plan to give their employees a raise next year, according to a study conducted by global advisory firm Willis Towers Watson Data Services. However, the amount most employees can expect to get may not be as thrilling as they hoped.

To come up with the 2019 General Industry Salary Budget Survey, researchers sought data from 858 companies between April and July. The companies represent a variety of industries, and data includes past and present salary budget increases as well as projected increases for next year.

Pay raises have stayed around the 3% mark for the past 10 years, according to Willis Towers Watson. In fact, the last year the percentage was substantially higher was 2008, when the average pay increase was 3.8%. The study found that companies next year plan to give many of their employees the same percentage raise they got this year:

  • Exempt nonmanagement employees can expect a 3.1% raise
  • Management employees can expect a 3.1% raise
  • Nonexempt hourly employees can expect a 3.0% raise
  • Nonexempt salaried employees can expect a 2.9% raise

If you’re an executive, next year’s compensation package may not match this year’s, as responding companies budgeted, on average, 3.1% for salary increases for executives next year, down from 3.2% this year.

However, there are still ways for employees to get a substantial boost in income from their current employers. Companies who participated in the study showed a willingness to be more generous to star performers and employees who score big achievements in a given year.

Discretionary bonuses — those given to employees for their work on special projects or extraordinary accomplishments — will average 5.9% next year for exempt employees, up from 5.3%, which was awarded on average last year. Managers and salaried nonexempt employees may see slightly larger discretionary bonuses next year, the survey found.

In general, employers tend to give prized employees financial incentives to stay on at the company. The survey found that employees who received the highest possible rating from their employers received on average a pay increase of 4.6% this year, which was 70% higher than the 2.7% raise offered, on average, to employees who received a mediocre rating.

Since companies seem more willing to offer more money to prized employees, it’s important to learn how to communicate your strengths and accomplishments to your manager. Also, make sure the two of you are on the same page when it comes to prioritizing your tasks and efforts. If you can show how you’ve been an asset to your employer, you’ll be in a better position to negotiate a raise. If you feel that your work is not being appreciated, a low unemployment rate (3.7% in July) means that now might be a good time to dust off the resume and look for a new job.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.

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