2024 Projected Salary Budget and Structure Increase

The salary increase budget reflects the annual pool of dollars to be used to increase employee wages. Typically, these dollars are distributed to employees using performance and placement within the salary grade as key factors in determining each individual employee’s increase. The annual salary increase is also meant to compensate for employees’ acquisition of skills, competencies, and experience since their last increase.

The projected salary increase budget has stayed consistent from 2023 to 2024 at 4% in both the general industry and in financial institutions. The salary increase budget (average salary increase given to all employees as a group) should continue to be used strategically to reward high performers and high potential employees for their contributions as part of a pay-for-performance philosophy. Banks should differentiate merit increases based on performance and salary grade positioning.

Salary Increase Guide – Best Practice Example

We recommend utilizing a merit increase matrix based on performance and position in the salary range (as mentioned previously). The combination of both these variables ultimately impacts each employee’s annual salary increase. In addition, a merit matrix serves as a guide for supervisors/managers and human resources to ensure that pay increases across departments are fair and support business objectives. In the table below, we present an example matrix which provides four different overall performance ratings and three categories for determining salary increase percentages, with a salary increase budget of 4.0%. These percentages will vary based on proximity to midpoint and whether the incumbent is above or below the midpoint value.

Example Salary Increase Matrix (1)

Projected Salary Increase Budget for 2024

Participants were asked if inflation and/or market pressure has impacted their projected salary increase budget for 2024. As shown in the chart below, forty percent (40%) of participants are reporting that inflation and/or market pressure has had no impact on their projected salary increase budget. The remaining participants are almost equally divided on whether their salary increase budgets will be higher or lower due to inflation and/or market pressure.

Projected 2024 Median Salary Structure Increase

Approximately three-fourths (77%) of the survey participants have a salary grade/range system in place. The salary structure increase is the amount of adjustment made to each salary grade’s minimum, midpoint, and maximum to maintain competitiveness in the market. The salary structure increase reflects the typical annual increase in cost of wages. The 2024 projected structure increase is expected to be 3.0% in banks and 2.8% including the general industry as summarized below.

About Blanchard Consulting Group

Blanchard Consulting Group is a national compensation consulting firm with offices in Atlanta, GA; Minneapolis, MN; and Orlando, FL. Our mission is to deliver independent compensation guidance to public and private regional and community banks to help them attract, motivate, and retain their key employees and directors. With an exclusive focus on the banking marketplace, our lead consultants have a unique industry perspective and expertise to offer. To learn more about our company please visit our website (www.blanchardc.com) for more information.

If you have any questions regarding this memo, please contact us at [email protected].