More Raises to be Tied to Performance
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Towers Perrin, September 2007
Despite the recent announcements by the Labor Department that job creation has slowed and unemployment has risen to its highest level in two years, Towers Perrin's 2008 Global Compensation Planning Report has found that salary budgets in the U.S. will likely increase an average of 3.9 percent in 2008.
But perhaps the biggest headline is that the survey, which includes responses from over 4,000 companies in over 60 countries, finds a noticeable shift from fixed pay toward tying pay raises to employee performance.
The report also finds that the gap of raises awarded to top and bottom performers is widening: In 2007 top-rated employees received an average raise of 5.6 percent compared to 1.8 percent for the lowest-rated performers.
Another interesting finding – perhaps tied to emerging industrial economies and the dollar's weak performance of late – is that a number of foreign countries believe they will post larger salary increases than the U.S. For instance, the report notes, in India salaries are expected to rise 15 percent in 2008, versus 14 percent in 2007. China stands to raise salaries in 2008 by 9 percent; the 2007 increase was 8 percent on average.
