Tip Tuesday: Raises key to overall strategy to retain A-players

August 5, 2011 by Tim Gould

If there’s one change the recession’s caused in overall business practices, it’s gotta be this: The old “I’ve been here another year, so I’ll automatically get a raise” concept is gone.

According to a study from HR consultant MercerHR,  the average increase in base pay is expected to be 3.0% in 2012, up slightly from 2.9% in 2011 and 2.7% in 2010.

But for top-performing employees – just 8% of the workforce – salary increases will remain high as organizations struggle to balance relatively stable compensation planning budgets with retention of critical talent.

According to Mercer’s 2011/2012 US Compensation Planning Survey, 97% of organizations are planning to award base pay increases in 2012.

As organizations continue to struggle with balancing reward programs and limited budgets with the need to retain critical talent, they are segmenting their workforce and concentrating rewards on key and top employees, Mercer says.

As a result, the gap between high-performing employees and those in the lower performing categories is widening significantly. Mercer’s survey shows the highest-performing employees received average base pay increases of 4.4% in 2011 compared to 2.8% for average performers (54% of the workforce) and 0.4% for the weakest performers (2% of the workforce).