Market Overview

Not Budging: 2019 Forecasted Base Salary Increases Stay at 3 Percent, According to Korn Ferry Research

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For the eighth year in a row, U.S. employees can expect to see a 3
percent median base salary increase in 2019, according to new research
released by Korn
Ferry
(NYSE:KFY). The average base pay increases are for workers at
all levels, from clerical through senior executive.

The salary increase figure is consistent with the actual base pay
increase of 3 percent reported by the surveyed companies in 2018. These
projected and actual increases have remained consistent since the end of
the recession and reflect employers' ongoing conservative attitude
toward base salary increases.

The U.S. Bureau of Labor Statistics recently reported that the overall
Consumer Price Index (CPI) rose 2.9 percent during the last 12 months,
virtually negating any real wage growth.

"Even though the United States is experiencing very low unemployment
levels and the war for talent is as strong as ever, the new reality is
that substantial pay growth is not a given," said Maryam Morse, North
American Rewards and Benefits Leader, Korn Ferry.

There is some variation of pay practices. Companies that pay in the top
10th percentile of the surveyed organizations predict a 3.2
percent to 3.3 percent increase across employee groups in 2019, while
the organizations that pay in the bottom 10th percentile
predict a 2.2 percent to 2.5 percent increase.

"While the 3 percent median salary increase number has become typical,
that doesn't mean that top performers won't be rewarded, which is
critical in this tight labor market," said Morse. "High performing
individuals often receive two times the median salary increases of other
employees. Many organizations are also differentiating more dramatically
in allocation of pay increases to help fund the increases for high
performers. This includes limiting awards for standard or substandard
performance.

"Companies are continuing to evolve how they reward employees. They are
relying more on short and long-term incentive plans and
pay-for-performance programs, where they can provide meaningful pay and
differentiation to top performers and top talent, versus simply
providing larger annual increases across the board," added Morse. "The
key is for organizations to ensure they are optimizing their reward
investment to drive performance in a way that is most meaningful and
relevant to their employees. We are at the nascent stage of
personalization and customization in how we deliver rewards."

About the research

Korn Ferry's forecast results are based on the latest data available
from its U.S. pay database, collected from March through June 2018.
Actual pay data is gathered from the same group of respondents and
tabulated in July each year. This is Korn Ferry's 39th year
of conducting the survey. Typical respondents to the survey include
compensation professionals in the Human Resources departments of small
to large U.S. organizations across a wide range of industries.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We help clients
synchronize strategy and talent to drive superior performance. We work
with organizations to design their structures, roles, and
responsibilities. We help them hire the right people to bring their
strategy to life. And we advise them on how to reward, develop, and
motivate their people.

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