A little birdie (named Towers Watson) told me recently that U.S. employers are planning to give employees this year the largest merit increases since the start of the financial crisis.

Now there’s some fine — and very welcome — news; I believe that sound you heard was the collective whoop of glee from your workforce.
 
According to TW, companies are budgeting merit increases of 3% for 2011. That compares with the 2.7% merit increase awarded to employees overall in 2010 and is the largest merit increase since before the financial crisis when increases typically averaged 3.5% to 4.0%. 
 
Now, that’s not going to translate into a Mega Millions-sized windfall for your employees, but with health care premiums, gas prices and food prices all rising, my bet is you won’t hear a lot of complaining.

Though the horizon is brighter for most companies, the survey also found that 5% of companies plan to freeze salaries for all workers this year, the same percentage as last year.

However, 13% of companies plan to freeze salaries for executives while 12% plan to freeze salaries for hourly workers. Both figures are down sharply from 2010.
 
"Most companies have turned the corner and are now in a much stronger position financially to recognize and reward employees, especially their top performers," says Laura Sejen, TW global head of rewards consulting.

"Throughout the recession and even afterwards, companies made it a high priority to provide better rewards to those employees who performed at the highest level and made the highest contributions to their organizations," she adds.
 
Indeed, according to the survey, companies provided the largest merit increases (4%) in 2010 to workers who far exceeded their performance expectations, while those who exceeded expectations received a 3.4% average increase.

Workers who did not meet performance expectations did not receive any increase in 2010.

Well, I for one know plenty of workers who far exceeded expectations last year, but still saw nothing in terms of a raise. So, I’ll ask the source: Did your company offer merit increases last year? And, even if not, will you give larger increases this year based on a stronger economic outlook? Share your thoughts in the comments.

Also, a programming note: No more posts this week, since I'm taking some vacation time. Meet me back here on Monday, March 7!

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