Merit increase planning and salary budgets for 2017

Merit increase planning and salary budgets for 2017

By on Oct 4, 2016 in Blog, Compensation Consulting, Performance Management | 0 comments

As the month of October begins, many organizations are getting deeper into their budgeting and planning process for 2017.  One area they are focusing on is merit increase and salary budget planning.

Keep this in mind as you make your compensation plans for next year:

  • Most survey data show an average salary budget increase of 3%.  This means that organizations will use 3% as the basis for awarding merit increases based on performance.
  • Most organizations are moving to a focus [versus anniversary] based performance appraisal cycle because it focuses the organization on preparing and delivering performance appraisals at one time which helps ensure they all get completed, and salary increases are applied at one time and it is easier for the organization to budget for them.
  • There has been a lot written about organizations moving away from performance reviews in favor of ongoing coaching conversations.  In theory this is good, but the practical reality is that it is less apt to happen given managers’ other priorities. Consequently, performance is not documented making corrective action, coaching, and possibly terminations, more difficult.

If salary budget planning is new to you or you, now is a good time to think about your process and assess whether you are getting the most out of your merit increase dollars, or if your performance appraisal system is as effective as it should be.  If you need assistance with this or other compensation consulting needs, contact us and check out our blog for more helpful resources.