Star Performers See Bigger Raises Than Most as Compensation Strategies Shift

Star Performers See Bigger Raises Than Most as Compensation Strategies Shift

Surveys of salary budget projections for 2018 show that US employers are planning to hand out raises of 3 percent on average, similar to the previous few years. The latest survey from Willis Towers Watson concurs in this regard, Bloomberg’s Rebecca Greenfield reports, finding that 98 percent of employers plan to raise salaries this year, with most employees getting a raise of around 3 percent. However, WTW also found that top performers are getting a bit more than the rest:

Employers are cautious about giving raises, and even as some complain of trouble hiring as the job market tightens, few feel pressure to pay their employees more, said Sandra McLellan, a researcher at Willis Towers Watson. A sliver of employees will, however, see a bigger bump on their pay stubs this year. So-called star performers, those who score highest in performance ratings, can expect, on average, a 4.5 percent salary bump.

With skills that have become highly sought in today’s job market, these are the people—fewer than 15 percent of the workforce—employers are struggling to hire and retain, the survey found. “There is a lot more attention paid to, ‘What do we really do for our star performers?’” said McLellan.

This shift from blanket annual raises to targeted increases (or in many cases, spot bonuses) based on performance appears to be the continuation of a trend observed last year, as more organizations question whether the substantial costs of raising salaries across the board are justified by their value as performance incentives. However, the effectiveness of switching to a more targeted, performance-based compensation strategy is not yet proven, and employees who perform solidly but are not “stars” may feel shortchanged if they lose out on the annual raises they have come to expect.