“In today’s labor market, the best way to get a raise is to go find a job at another company.” – Group Vice President Brian Kropp for Gartner, Inc., speaking to the Washington Post.


Every employee is thankful for any raise. Someone’s hard work paying off and being rewarded for it is a great feeling; however, are employees really being rewarded?

We’re all familiar with performance reviews and how everyone is assessed. By most industry standards, generally, if you are the best of the best you will get a 3% annual raise. This trend appears as though it will continue according to the WorldatWork 2018-2019 Salary Budget Survey: Top-Level Results, which projects U.S. salary budgets to rise by an average of 3.2% in 2019. Yet, using a Geometric Mean analysis reveals the average annual inflation rate for the entire period since 1913 has been 3.15% per year.

Case Study

For example, a salaried employee who makes $40,000 and is achieving at the highest possible level for five years will get 3% raises each year. This makes said employee’s salary 15% higher, resulting in an annual salary of $46,000.

At the same time, average inflation rates tell us a 3.15% increase in cost of living each year means the same employee needs to make $46,300 to maintain the same standard of living as five years previous. So, the best-case scenario for an employee is to come out $300 short.

What Can Companies Do?

Offering more than money is what a company needs to rely on. A strong mission, vision and value system to increase the importance of an employee’s work will make an employee’s position more intrinsically significant. In addition to providing hard benefits like insurance, paid time off, etc., companies can provide soft benefits such as offering remote work, casual dress, employee events, training/growth opportunities and generally promoting a positive work-life balance.

This value-add to an employee’s sense of purpose can offset a reliance on salary as the driving factor of ongoing employment. Dedication to the overall vision will drive productivity—though the 3% raise is also important.

Pro Tip

Avoid being disingenuous. The workforce landscape has changed rapidly over the last 20 years, and the current and incoming workforce is attuned to acts that appear inauthentic, placating or reactionary. That’s why traditionally valued systems such as annual reviews, the 40-hour workweek and compensation metrics are now being challenged and re-evaluated. A strong company will address employee needs in ways that are consistent with its values, reflect an ongoing culture of growth and provide a sense of investment in its people.


The best action you can take is identifying top performers you want to retain and figuring out what it will take in the short- and long-term to keep them. With this insight, you will save money by avoiding Brian Kropp’s prediction of having to pay new employees who are switching jobs more than your current employees, curtailing sunken training costs, and not feeling forced to accept below-average candidates to reach your bottom line.

Our workforce is our strongest asset and investing in it will always pay off.