- Though competition for top talent remains intense, American employers plan to keep the purse strings tight on compensation budgets for 2017, according to a new survey. The result may likely create a serious hurdle for employers in their efforts to attract and retain high-performing talent.
- Aon Hewitt’s 2016 U.S. Salary Increase Survey, which polled 1,074 American employers, projects base pay increases of 3.0% in 2017, up slightly from 2.8% in 2016. Spending on variable pay is expected to be 12.8% of payroll in 2017, unchanged from 2016.
- Financial challenges were reflected by the number of employers who froze salaries in 2016, as the survey showed 10% of employers froze salaries (up significantly from 4% in 2015). Of those employers, one-third were in the sinking energy sector, and freezes were applied across all levels including executive, mid-to-senior, junior and hourly workers.
The Aon Hewitt survey indicates that many employers are holding tight on compensation spending mainly because the job market continues to improve and job seekers have the upper hand — not a great idea when it comes to competing for top talent. The upshot means either re-thinking existing compensation strategies or focusing on the other benefits and perks in the mix as a way to attract and retain talent.
One such strategy would be to focus on voluntary benefits as a way to keep current employees engaged as well as attract new talent. From pet insurance to identity theft protection and critical illness coverage, voluntary benefits, which are employee-paid perks (usually at a discount), are being used to feed the changing needs of today's workers. And with the compensation needle barely budging in 2017, employers can either raise their existing voluntary benefit profile, if it's strong, or boost it as a counterbalance in the talent wars.