Pay Raises for 2014- What companies will be paying…

moneyAs we prepare for 2014, many of us are wondering what salary increases have been allocated by most companies.  According to SHRM, (Society for Human Resource Management) the increase for salaries in 2014 will rise slightly to three percent.  In 2013 the actual salary increase budgets were 2.9 percent which is well below pre-recession levels of 3.5-4.5 percent range. This is the third year that salary increases have held to three percent indicating a trend with most companies.  Only four percent of companies state they will not be giving a raise.  This is up significantly from the 2008 recession where 75% of employers implemented a “pay freeze”

Employees say they want performance to influence pay.  So what is a company to do if you have a limited budget for pay increases but want to get the best bang for your buck?  Here are a few compensation strategies to consider to help companies get the greatest impact of motivating and rewarding employees:

  • Don’t give the same amount of pay increases to everyone.  Pay for performance sends the message to employees that reinforces that good performance will get rewarded and is important to organization.
  • Allocate a higher percentage (perhaps double) to your top performers even if this means adding additional money to your budget.  If you do not have money in your budget for pay raises across the board, allocate some money for these top performers.
  • For marginal performers, consider not allocating any pay raise. Use this time to communicate performance expectations and job requirements.
  • Communicate your compensation strategy to all employees.  Merit pay can have a positive influence on employee job performance, especially if employees know how they are being measured.  If there is enough of a pay differential between the top and mid to low-level employee, then the pay increase can influence future job performance and provide an incentive to perform at the top-level.

How much are you planning to increase pay for 2014?  What are some of your compensation strategies that have been effective?

Scholley Bubenik is a Human Resource Consultant for Premier HR Solutions providing services to Austin area businesses.  For additional information, visit or contact Scholley at


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