The Return of the Raise

Interest in retaining top talent drives growth.

They're back. Salary increases, that is, at least according to consulting firm Mercer's annual compensation planning survey. Data show that more than 98% of the companies surveyed expect to award base pay increases in 2011. The survey population is more than 1,100 midsize and large U.S. employers.

Raises are back for good reason, says Catherine Hartmann, a principal with Mercer's rewards consulting business. "The risk of losing key employees is top of mind as the economy recovers and certain labor markets improve. And while non-monetary awards such as career development and training are effective in retaining employees, employers realize that top-performing employees are loathe to go another year without an increase in pay."

The average increase is projected to be 2.9%, with wide variations expected based on employee performance. For example, the highest-performing employees are expected to receive average base pay increases of 4.3%, while the weakest performers could grow their base pay by 0.5%.

Industry sectors also are a factor in base pay increases.

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