100 dollar billAccording to a new Hay Group study, U.S. employees should expect a median base salary increase of 3 percent next year, a rate consistent with salary projections for the past two years. The increase results in a net gain of 0.8 percent after a net loss of 0.6 percent in 2012. The median compensation increase is being reported for executives, middle management, supervisory, and clerical positions and holds across most industries. The two exceptions are the oil and gas and luxury retail sectors which are projected to report a 3.3 percent and 3.5 percent increase, respectively.

“With the economy continuing to grow slowly, it is not surprising that salary increases have followed suit,” said Jeff Blair, Hay Group’s U.S. Productized Services Leader. “Relatively low annual salary increase budgets are limiting the financial rewards available to employers. As a result, organizations are increasingly focused on improving employee engagement and creating a positive work climate for employees.”

“Sectors with increases above the general industry median often have more optimistic business performance outlooks,” said Tom McMullen, Hay Group’s North American Reward Practice Leader. “Some sectors rebounded more quickly and have higher margins than other industries, which may explain why projected base salary increases are higher. Moreover, in most industries we see organizations seeking to remain competitive by placing greater emphasis on variable pay programs, career development opportunities, meaningful job designs and non-financial recognition programs.”

Mullen continues, “Organizations are devoting more time and energy to better understanding what employees truly value in their reward package and modifying their programs to reflect those preferences,” adds McMullen. “Quite often, it is the lack of attention to some of the non-financial rewards that drive good employees out of organizations, so this can go a long way towards improving employee engagement and retention.”


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