Companies invest less in raises, more in benefits
Companies seem to be more interested in helping employees advance rather than handing out significant raises to their workforce.
American companies are projected to increase employee salaries by 3% in 2019, according to a global survey by HR consulting firm Korn Ferry. This rate has been consistent for the past three years, meaning the average raise has not increased or decreased in that time, the survey says. Results were polled from Korn Ferry’s database of 20 million employees around the globe.
“The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear: On average, employees are not seeing the same real pay growth they did even one year ago,” says Bob Wesselkamper, Korn Ferry global head of rewards and benefits solutions.
Only IT, sales and marketing roles are seeing higher raises each year, according to Don Lowman, senior client partner at Korn Ferry, as the technical skills needed to perform those jobs are in high demand.
“The days of providing increases across the board are gone, and I don’t think they’re going to return,” Lowman says. “We’re going to see companies spend money on employees with potential.”
In general, instead of offering annual raises, companies are relying on their benefit offerings to retain workers, Lowman says. While droves of employees are beefing up their benefits packages, perks that provide employees with career development opportunities are becoming an important employer strategy.
“Those are investments that don’t show up in paychecks, but are nonetheless very meaningful to employees,” Lowman says. “Companies are starting to move toward these practices instead of company-wide raises because there’s more return on their investment.”
Professional and career development benefits are on the rise, according to research from the Society for Human Resource Management. In fact, increases were seen for several professional and career developments since 2014, including offsite and onsite professional development opportunities, certification/recertification fees, professional license application or renewal fees, cross-training to develop skills not directly related to the job, formal mentoring programs (and college selection/referral programs.
Career development opportunities can include something as simple as allowing an employee to job shadow in another department. Letting someone from sales, for example, sit in on a typical day in the finances department can give them an idea of how well they’d fit into a new role. Lowman says it’s a great —and low-cost —, method of encouraging employees to consider a long-term career at the company.
More lavish professional development options may involve sending an employee on international assignments, where they can build their professional network and be exposed to new opportunities. Similar assignments within the United States can be just as valuable for networking; the chance to grow is what’s important, Lowman says.
“Employees are more likely to stay when they see there are opportunities to move up within your company,” Lowman says. “This is especially important to millennials, who are always looking for new growth and development.”