For those of you finalizing 2019 year-end/2020 pay increases and bonuses, this article is definitely for you.
Performance-based pay increases are projected to be 3.2 to 3.3%. This is up only slightly from last year’s 3.1%.
However, when looking at the total of increases for 2019 year-end/2020, the percentage increases to in the high 3’s or even 4%. Please note that “total increases” include performance-based/merit increases plus:
- Cost of living adjustments (hopefully only if required by a collective bargaining agreement)
- Across the board increases (shame on you!)
- Promotional increases
and - Additional increases (market &/or internal equity adjustments)
Research shows that the following pay increase practices remain very much in place, and are being adopted by an increasing number of organizations:
1) Differentiation in percent directly related to individual performance
- About 9 out of 10 organizations now do so.
- This practice shows increases for the highest level performers often being double or more of that for the average employee.
2) No pay increase for individuals whose performance is evaluated to be below a threshold established by the organization
- In some organizations this threshold is established as “below fully meets performance requirements”.
- In other organizations the standard for being eligible for a pay increases is lower—such as “partially meets performance requirements”.
3) The use of lump sum increases rather than an increase in base pay
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4) An extension of inclusion in eligibility for incentive compensation to employees beyond executives and managers
- Frequently now including professional and administrative staff
- Some organizations extending it to all employees
5) A growth in the part of total direct pay (salary plus any form of variable pay) being delivered by means of incentive compensation
Trinity’s compensation and performance management services include:
- Reviewing/developing pay philosophy and structure
- Conducting pay analysis in comparison to the market place
- Reviewing pay policies and practices for compliance with the Fair Labor Standards Act and other applicable regulatory requirements
- Designing incentive compensation plans, such as GainSharing
- Creating plans such an Employee Stock Ownership Plan (ESOP) or a “Shadow” Stock Plan for privately-owned companies
For more information:
- E mail Trinity at info@TrintyHR.net
- Visit our website at www.TrinityHR.net
- Call us at 856.905.1762 or Toll Free at 877.228.6810
You have HR questions…Trinity has answers!