The Wall Street Journal reported that the consulting firm of Aon Hewitt published the results of a survey that businesses are planning to keep budgets for raises relatively flat in 2018, while continuing to devote more payroll dollars to performance-based pay. Despite low unemployment and increased competition for talent, companies are bearish on across-the-board pay raises. “Organizations are expressing reservations about the years coming and, for the first time since the recession, are signaling doubt or uncertainty about what they think their performance will look like in the coming year,” he said.
Companies are paying to keep their highest performers happy and in place, with an average 12.5% of payroll going to incentive and bonus pay next year, while reducing or eliminating raises for low performers. This did not surprise me. We have observed that companies are keeping their belts tightened, raising the bar on hiring, demanding more performance, and paying-up only for top performers. For the rest, it will continue to be skimpy pickens.