business

The Outlook for Pay Raises in 2017

Look for average hikes of about 3%, but highly rated workers will get more.

Kiplinger's spoke with Sandra McLellan (pictured left), the North American compensation practice leader for consulting firm Willis Towers Watson, about employer pay raise trends for 2017. Here's an excerpt from our interview:

What kind of a raise can people expect in 2017?

Companies are forecasting 3% increases, similar to years past. But how that budget is spent may vary by person. Employees with the highest possible rating could see increases in the range of 4.5% to 5%, while low performers get an increase between 0.7% and 1%. Bonuses for salaried employees are projected to be 11.6% of pay, on average, with rewards for special projects or onetime achievements set at 5.6%, on average.

What can workers do to improve their standing?

A lot of companies are making the process more about feedback than about performance rankings. That means there's a real opportunity to sit down with a manager and make sure there's a mutual understanding: What’s really expected of me, how will I be measured, and how will that impact my pay? The pace of work changes quickly, so ask how your goals are changing. Employees can also ask about more-individual approaches to work: Can I work from home or work alternative hours? A lot of times these programs are not communicated as well as they could be. They might not put dollars into your pocket, but they make life easier.

The job market is getting tighter. Do wages reflect that?

For many skills, and for workers who are high performers or who have high potential, it's getting harder to attract talent. Increasingly, certain employees may see more movement on pay. Also, employers say that they need to create more opportunities internally. If you want to change jobs, grow in your career or develop skills that help you remain current, a lot of times there's more op­portunity available within your own company than you might think.

Which industries will be the most generous with workers? What jobs are in demand?

It's more about job skills than industries. And the skills that employers are having a harder time finding are the ones you might expect: digital and technical capabilities. These skills are now required in jobs that never needed them before. A marketing person today needs the ability to understand the dynamics of online channels, for example.

What other trends do you see?

Companies say they might lengthen the time between pay increases. One reason is that employers want to be able to make the size of the increase more meaningful. Or they might look to increase the differentiation between workers, spending more for high performers.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked
stocks

The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked

The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Wa…
November 16, 2021
Should You Take an Extra Big RMD This Year?
required minimum distributions (RMDs)

Should You Take an Extra Big RMD This Year?

Sometimes only taking the minimum IRA distribution can be a costly mistake. When deciding how much to withdraw this year, you need to consider the big…
November 23, 2021

Recommended

Bias at Work: How to Defuse a Ticking Time Bomb in Your Organization
careers

Bias at Work: How to Defuse a Ticking Time Bomb in Your Organization

An interview with the author of the book “Bias Interrupted” reveals hidden signs of bias in the workplace and offers ideas for what to do to help corr…
November 26, 2021
The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill
Politics

The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill

Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.
November 22, 2021
Watch Out for Job Listing Fraud
Scams

Watch Out for Job Listing Fraud

If one of your New Year’s resolutions is to find new employment in 2022, be on guard against job-listing scams.
November 22, 2021
What’s Stopping You from Making the Jump to a New Career?
careers

What’s Stopping You from Making the Jump to a New Career?

From procrastination to negative thoughts to paralyzing fear, here are 11 things that hold people back from taking a chance on a fresh start. Check th…
November 12, 2021