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Saturday, April 19, 2014
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Employers’ focus remains on top performer pay and employee engagement

20/07/2013 08:22 (272 Day 12:18 minutes ago)

The FINANCIAL -- As the economy steadies, so do pay raises for US employees. The average raise in base pay is expected to be 2.9% in 2014, modestly rising from 2.8% in 2013 and 2.7% in 2012 and 2011, shows  Mercer’s newest survey results. Moreover, salary increases for top-performing employees – about 7% of the workforce – will be higher as companies continue to focus on retaining top talent.


“Employers recognize that their greatest challenge is to retain their top performers to avoid post-recessionary flight of these valuable assets. This means they have to reward and recognize them,” said Jeanie Adkins, Partner and Co-Leader of Mercer’s Rewards practice. “This includes providing higher pay increases along with other non-cash rewards such as training opportunities and career development,” Adkins added.

As organizations look for enhanced ways to pay for performance, they are segmenting their workforce first and foremost by high-performing as well as high-potential employees. As a result, companies are rewarding these employees with significantly larger increases than those in the lower-performing categories. The highest-performing employees received average base pay increases of 4.6% in 2013 compared to 2.6% for average performers and 0.2% for the lowest performers, shows Mercer’s survey.

“In an improved economy top performers continue to get salary increases nearly twice that of an average performer which indicates that pay for performance is alive and well in the annual merit process,” said Catherine Hartmann, Principal in Mercer's Rewards consulting business. “Differentiation of salary increases based on performance is now commonplace and remains an effective way for employers to recognize those employees that enhance the company’s competitiveness and contribute to its success,” she added.


In addition to workforce segmentation, organizations are studying the key drivers of employee engagement and targeting certain groups, such as high-potentials or those with critical skills, with enhanced reward programs. Moreover, they are investing in a variety of practices to strengthen employee engagement and help improve work-life balance overall for employees. Some of the more prevalent practices include sponsored conferences, professional development events, additional non-monetary recognition awards, and enriched job sharing/flexible hours, according to Mercer’s survey.

“Employers are clearly starting to see the value of assessing and addressing their workforce needs systematically,” said Ms. Hartmann. “They recognize that engaged employees are less likely to seek job opportunities outside of the company, and therefore, have a more positive influence and impact on both team and business performance,” Hartmann added.



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