Published: 23 November 2022
Organizations continue to use merit increases as a core mechanism to reward talent and retain critical employees. As they prepare for 2023, total rewards leaders can use this data on merit increases to benchmark their objectives against peers’ and prepare for trends in the upcoming year.
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Almost half (44%) of organizations plan to increase their merit budgets in 2023, reflecting pressure from the continued inflationary environment and competitive labor market.
Eighty-five percent of organizations plan to give a merit increase to at least three-quarters of their employees.
Approximately half (53%) of organizations expect that merit awards will be higher in 2023 than they were in 2022.
The merit increases employees will receive will largely depend on job performance, with underperformers, core contributors and high performers receiving median increases of 0%, 3.5% and 5%, respectively.
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Total Rewards Research Team