Despite the pandemic economic recession, most employers, including financial institutions, said they plan to provide raises and bonuses for employees in 2021.
The 2020 General Industry Salary Budget Survey, conducted by Willis Towers Watson Data Services, found companies are projecting average salary increases of 2.8% for all employees next year, including exempt, non-management and management employees. Nonexempt salaried and hourly employees as well as executives are in line to receive slightly smaller increases (2.7%).
Among financial institutions, executives are projected to receive salary increases of 2.8%; managers (non-executives), 3.1%; exempt non-management and nonexempt salaried employees, 2.9%; and nonexempt hourly employees, 3%, according to the survey.
Among other major industry groups, the hard-hit health care and retail industries projected a slight bump but still fell shy of pre-pandemic levels with salary increases projected to average 2.6% and 2.8%, respectively. Employees in the insurance and non-durable goods industries are in line for above-average increases of 2.9% and 3.0%, respectively.
Only 7% of companies are not planning pay increases next year, down significantly from 14% this year, an indication that many organizations are projecting a turn toward normalcy in 2021. Companies granted employees increases between 2.5% and 2.7% this year, below the 3%
they had budgeted before the pandemic hit. Salary increases have hovered around 3% for the past decade, according to Willis Towers Watson, a risk management, insurance and advisory company.
Throughout this year, credit unions across the nation have been providing bonuses or hourly pay increases to front-line employees who are working under challenging circumstances while serving members during the corona-virus crisis.
“This has been the most challenging compensation planning year for many companies since the Great Recession,” Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson, said. “However, unlike then, companies have been hit differently depending on their industry, the nature of how work gets done and the type of talent they need. While many companies managed to avoid cutting salaries during the pandemic, most have reduced the size of this year’s salary budgets and are holding the line on increases for next year. At the same time, companies continue to embrace variable pay and other reward initiatives to recognize and help retain their best performers.”
The survey also found three out of four companies are planning to award annual performance bonuses next year, roughly the same percentage as this year.
Bonuses, which are generally tied to company and employee performance goals, are projected to average 11% of a salary for exempt employees, while bonuses for nonexempt salaried and hourly employees will average around 6.8% and 5.6%, respectively.
“Most companies will continue to be in a cash preservation and cost optimization mode regarding their budgets. And although many companies are looking toward stabilizing their business next year, the full extent of the economic impact of the pandemic is yet to play out,” Hartmann explained. “Companies will remain cautious and continue to adopt strategies that attempt to balance employee engagement with protecting their core business. This could call for further segmented allocation of base salary increases and use of discretion to preserve incentive payouts for companies that don’t reach performance targets.”
The Willis Towers Watson Data Services General Industry Salary Budget Survey was conducted between April and July 2020 and included responses from 1,010 companies representing a cross section of industries, including financial services.