Dive Brief:
- Financial concerns and budgetary constraints may be the reason why more than one-third of U.S. employers in a recent Willis Towers Watson survey said they have reduced projected salary increases for 2021, the advisory firm said in an Oct. 7 statement.
- Still, half of the 705 respondents said they would keep earlier projected increases intact. Projected salary increases for executives sit at 2.5%, down slightly from past figures, while other employee groups — including management and non-exempt salaried and hourly employees — are projected to see increases of 2.6%.
- Eighty-four percent of employers plan to deliver pay increases on time this year, Willis Towers Watson said. Additionally, a majority said they would provide annual performance bonuses, but more than one-quarter said they had not yet decided this point. Executives and management were the most likely group to see such bonuses.
Dive Insight:
The survey is a follow up to Willis Towers Watson's earlier survey conducted May through July of this year, which showed similar projections for the upcoming year. Most employers in the survey said they expected "a turn toward normalcy in 2021", according to the firm.
Other research has pointed to compensation increases in other areas. For example, September data from Salary.com showed that merit increases would rise to an average of 2.6% next year, an increase from the 2.4% mark forecasted for 2020, while median salary increase budgets were expected to remain at a flat 3%. Certain sectors of the economy may be more likely to see increases than others. The transportation and warehouse industry, for instance, has seen wage growth at 3.2% in the past year, whereas wage growth for sales jobs declined to 1.8% annual growth, according to data from PayScale.
The projections mentioned above appear to contrast company strategies from the pandemic's earlier stages. In March, Willis Towers Watson published a report showing that many North American employers implemented hiring freezes in response to the pandemic, while wage freezes and delayed raises were less common. A month later, an analysis of Securities and Exchange Commission filings by insurance company Gallagher found public companies had implemented pay cuts; 66% of those in the analysis that made pay cuts said the changes were either "temporary" or "indefinite" in nature. Other evidence shows some employers made salary cuts that have not entirely been offset in many cases.
The issue of pay has been affected by forces other than the economic downturn, however. Pay equity continues to be an issue for HR departments as employees in various industries voluntarily disclose their pay information. Sources who recently spoke to HR Dive on the subject advised employers to avoid a retaliatory approach in the event of such disclosures, and that they may instead seek to provide context about disclosures while working internally to correct inequities.
A number of major employers are also increasingly addressing the subject of diversity and inclusion through executive pay. Starbucks announced this month that it will link executive compensation to its diversity, equity and inclusion goals beginning its next fiscal year. And in March, Food Dive reported that Coca-Cola would consider the wages it pays all employees when setting executive salaries.
