According to new XpertHR research in the company’s U.S. Pay Planning 2015 survey, two of every three employers are set to give pay raises in the year ahead, with most looking to award an extra 3 percent in 2015. In all, 64.8 percent of employers are confident of making a pay award in the coming year. Just 7.5 percent said there would be no salary raises next year, with a further 27.8 percent unsure.
“This upswing reflects a mood of cautious optimism as the economy gets healthier and the number of long-term unemployed workers continues to drop,” says Peggy Carter-Ward, Head of Content at XpertHR. “As the economic recovery continues to take hold, employers are also keeping a watch on their competitors to ensure they can recruit and retain the people they need.”
The factors most commonly cited as driving up pay awards in the next year are: improvements to employee productivity, better organizational performance and ability to pay, and the need to recruit and retain key employees. In organizations of all sizes, and in every sector of the economy, the forecasted increase in the pay budget stands at a median of 3 percent. Fewer than 25 percent expect to budget for less than that, while another 25 percent plans to add 4 percent or more to pay.
Additionally, about two-thirds of pay awards are merit based, and that figure looks set to rise as employers seek to strengthen the link between pay and performance. Most favored are senior managers, with 25 percent expected to receive a raise of 5 percent or more in 2015.