According to new research released by the Hay Group, US employees can expect a median base salary increase of 3.0% in 2015.
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 annualised consumer price index growth at 2.1%, the resulting base pay movement for 2015 is expected to be a net gain of 0.9%.
The oil and gas industry is expected to exceed the average increase. Oil and gas employees can expect a median base salary increase of 4.0% next year, according to the research.
In contrast, hospital employees will see a smaller increase, only 2.0% for most employee groups in 2015.
Jeff Blair, Hays Group’s US Productized Services Leader, said: “Sectors with increase that vary from the general industry outlook have tended to also show varied historical and future business performance outlooks.
“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”.
Organisations consider non-financial rewards
According to data from the Hay’s Group Reward Next Practices research study, reward leaders will increasingly look to tie reward programs to performance management processes. Study data shows that 56% of organisations are increasing future emphasis on improving their variable pay programs and 63% are focused on improving key non-financial rewards programs.
Tom McMullen, Hay Group’s North American Reward Practice Leader, said: “Improving performance management processes and better linking these rewards programs are top of mind for many reward leaders. Said another way, organisations are quite willing to pay for performance, but only if they achieve their performance goals”.
Commenting on current salary trends, McMullen said: “With typical base salary increases still below pre-recession levels, organisations are walking a fine line between maintaining a focus on managing their labour costs given the mixed economy, while also improving employee engagement and retention levels. As the economy continues to improve, labour markets will heat up, particularly for high demand roles, making it crucial that companies take steps to secure long-term commitment from their best talent”.
Mark Royal, Senior Principal within Hay Group Insight, Hay Group’s employee research division, said: “When financial rewards are limited, it’s more important than even for organisations to remember that money isn’t the only thing that matters to employees. 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”.
Adapted from a press release by Emma McAleavey.
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