2016 SALARY INCREASES AND RECRUITMENT

Published February 28, 2016

Whether you’re an Information Technology company or a Health Care Provider, the increase in salaries in 2016 will impact your organization.

CNI Recruting: 2016 SALARY INCREASES AND THE IMPACT ON RECRUITMENT

As a component of our World Class Recruitment Service, CNI Recruiting, a New Jersey based Recruiter that recruits throughout the U. S., publishes periodic business articles. This article discusses 2016 salary increase projections and the impact on retention and recruitment.

2016 Salary Increase Projections

The average salary increase in the U.S. for 2016, as projected by seven national employer surveys is 2.9%. The companies conducting the surveys and the survey results are:

Fast Company (2.7%)
Economic Research Institute (ERI) (2.7%)
Mercer (2.9%)
The Conference Board (3.0%)
The Hay Group (3.0%)
Towers Watson Data Services (3.1%)
WorldatWork (3.1%)

The survey results are consistent with the recent trend in salary increases:

2012 2013 2014 2015
2.7% 2.8% 2.9% 2.8%

In addition, the surveys indicate that an increasing number of companies are transitioning to short term incentive programs, bonuses and salary increases based on performance, rather than annual cost of living or other annual increases.

Salary Projections By Metropolitan Area

According to the Bureau of Labor Statistics, salary increase projections for 2016 by metropolitan areas indicate no significant outliers. However, it may be useful to note that six cities reported an increase of three to four-tenths of a percentage point above average salary increases in 2015: Detroit, Miami, Portland, San Diego, St. Louis and Tampa.

Bigger Increases For Top Performers

The surveys also indicate that employers continue to provide their best performers with larger pay raises (an average of 5.8%) in order to attempt to retain talent in a tightening labor market.

Promotional Increases

Employers are offering even higher increases related to promotions. In 2015 base salary raises associated with promotions increased an average of 8%. For professionals, the average was 7.7% and for executives, promotional increases were 9.1% of base salary. It appears that these trends are continuing into 2016. However, these increases are lower than the increases prior to the Great Recession. According to the Bureau of Labor Statistics, average hourly earnings for private-sector jobs have increased about 2% annually, since 2009, compared to 3% previously.

Compensation and Employee Turnover

Although there are important non-compensation reasons for employee turnover, the biggest reason continues to be salary and benefits, as confirmed by a survey by Robert Half.

The following are the top five reasons for employee turnover:

Salary and benefits (38%)
Limited opportunities for advancement (20%)
Unhappy with management (16%)
Overworked (12%)
Lack of recognition (12%)

Impact On Recruiting

Since employers traditionally have reserved their highest salary increases to recruit top performers, the continuation of the trend of modest average salary increases for current employees will partially offset the difficulties of recruiting in the current tight labor market. Of course, this strategy brings significant potential problems with it. When current employees learn that new hires are being paid more than they are for essentially the same level of responsibility, they can become disgruntled, with all of the associated downsides, including resignation for a better paying position with another company.

CNI Recruiting is the Gold Standard of sales and marketing recruiting. Our referral fee is only 15% of Candidates’ first year base salary for all professional levels. There are no other charges and no surprises and we receive our fee only if you hire our Candidate. We provide a World Class Recruiting Service, including a market leading guarantee. Please contact me today…we will exceed your expectations.

Fred Neufeld, President
CNI Recruiting
[email protected]
(908) 874-6148