U.S. Employees Can Expect Base Salary Increases of 3.0% in 2015, New Hay Group Research Finds
--Flat Wage Increases Turn Up Pressure on Employers to Engage and Retain Critical Talent--
PHILADELPHIA--(BUSINESS WIRE)--U.S. employees can expect a median base salary increase of 3.0% in 2015, according to new research released by Hay Group, a global management consulting firm. These figures are consistent with forecasted base salary increases reported for the past four years and largely the same across executive, management, professional, clerical and operations roles. After factoring in annualized consumer price index growth at 2.1%, the resulting base pay movement for 2015 is expected to be a net gain of 0.9%.
“Sectors with increases that vary from the general industry outlook have tended to also show varied historical and future business performance outlooks”
“With typical base salary increases still below pre-recession levels, organizations are walking a fine line between maintaining a focus on managing their labor costs given the mixed economy, while also improving employee engagement and retention levels,” said Tom McMullen, Hay Group’s North American Reward Practice Leader. “As the economy continues to improve, labor markets will heat up, particularly for high demand roles, making it crucial that companies take steps today to secure long-term commitment from their best talent."
“When financial rewards are limited, it's more important than ever for organizations to remember that money isn't the only thing that matters to employees,” said Mark Royal, Senior Principal within Hay Group Insight, Hay Group's employee research division. “Hay Group findings show that confidence in leadership and company direction and perceptions of career development opportunities are among the most important drivers of employee engagement, making it critical for companies to adopt a total rewards approach – using the power of both financial and non-financial incentives – to increase the impact of their retention efforts."
Oil & Gas Comes Out on Top, While Healthcare Expects Lowest Pay Increases
Hay Group's study found that median base salary increases of 3.0% hold steady across most industries, including chemical, consumer products, financial services, health insurance, industrials and utilities. Two industries, however, stood out from the status quo: the oil and gas industry forecasting higher base salary increases, and hospitals forecasting lower increases. In fact, oil and gas industry employees can expect a median base salary increase of 4.0% next year, while hospital employees can expect an increase of only 2.0% for most employee groups in 2015.
“Sectors with increases that vary from the general industry outlook have tended to also show varied historical and future business performance outlooks,” said Jeff Blair, Hay Group’s U.S. Productized Services Leader. “In most industries, however, we see significant employee flight risks given the improving economy and more employment opportunities for skilled workers. Employers will have to manage this risk, focusing on high potentials and employees with mission-critical skills and roles to ensure they don't end up without the talent required to achieve future growth.”
Organizations Eye Variable Pay and Non-Financial Rewards
Looking ahead to 2015, reward leaders will increasingly look to tie reward programs to performance management processes, according to data from Hay Group’s Reward Next Practices research study. The study data shows 56% of organizations are increasing future emphasis on improving their variable pay programs and 63% are focused on improving key non-financial reward programs. “Improving performance management processes and better linking these to rewards programs are top of mind for many reward leaders,” McMullen commented. “Said another way, organizations are quite willing to pay for performance, but only if they achieve their performance goals.”
About the Survey
Hay Group’s forecast results are based on the latest data available from Hay Group’s US database, provided by over 400 US organizations from March through June 2014. This is Hay Group’s 35th year of conducting the survey. Typical respondents to the survey include compensation professionals in the Human Resources departments of small to large US organizations across a wide range of industries. Hay Group’s US database represents compensation practices for over 2,400 companies and over 6 million employees.
For more information, or to arrange an interview, please contact Evan Stisser at 212.840.1661 or email@example.com.
About Hay Group
Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.
We have over 3000 employees working in 87 offices in 49 countries. Our insight is supported by robust data from over 125 countries. Our clients are from the private, public and not-for-profit sectors, across every major industry. For more information please contact your local office through www.haygroup.com.