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For the past decade, merit budgets have hovered around 3%, but current trends suggest that salary increase budgets are rising to levels not seen in more than 20 years.

Given the current trend, DiFonzo said merit budgets are likely to settle to about 3%, but larger organizations and more profitable industries with higher demand for their products and services will continue to average higher than 3%.

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Step 3: Internal Equity Analysis and Pay Compression Evaluation With market alignment established, attention must turn inward.

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Staying within the existing 3% budget and granting a one-time inflation offset cash award of 3% helps to minimize avoided the long-term effect of the large pay increase.

Sal DiFonzo, managing director, compensation and rewards consulting at Gallagher, and a member of WorldatWork’s Compensation Advisory Council, said the most salient trend he saw this year was the increase in merit budgets from 3% to now between 4-5%. 

.; In a 6-3 vote, the U.S.

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