Projected Employee Salary Increases for 2021

Based on annual pay increase studies released by WorldatWork, Willis Towers Watson and earlier this year, the average salary increase budgets will range between 2.8% and 3.0%. Stephen Miller, CEBS published and released a SHRM article on September 3, 2020 titled, “Salary Increase Budgets Decline for First Time in 12 Years.”

The Willis Towers Watson survey indicated that approximately three quarters of the companies plan to distribute performance bonuses in 2021.  This survey projects bonuses to average 11% of salary for exempt employees and 6.8% to 5.6% for non-exempt employees.

We saw a softening of employee pay adjustments (COLA, General, and Merit) during this year due to the pandemic for our client organizations and businesses. We believe that our public (non-profit) clients will budget between 2% and 3% for 2021 pay increases and our private for-profit clients are planning for closer to 3%.

We have been pleased to see the resiliency of our clients during this very challenging year and we look forward to helping them navigate compensation planning in 2021 and beyond.

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Exercising the Salary Ranges

Blair and I have noticed that some of our clients are not adjusting their salary ranges and this is creating some internal problems which could be avoided.  When organizations don’t adjust their salary ranges or salary steps, then department managers start getting creative with modifying job descriptions and job values with the desire to obtain an increase in base salaries for their department positions.  Once this starts to happen, then everyone gets on the bandwagon to do the same thing.  By adjusting your salary ranges every one to two years, you keep your salary ranges or salary steps close to market as well as you avoid the need to mess with changing job descriptions and job values for the sake of increasing base salaries.  Let’s keep the salary ranges near market whether you have the budget or not to adjust employees’ base salaries. 

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