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Annual Merit Increase Program

Determining merit increases for employees is part of the Annual Salary Management process. The level of merit pay an employee receives is connected to an employee’s job performance and achievement of goals for the year. The overall merit budget is set according to the competitive market and the University’s financial resources.

Salary Planning Process 

Each year Northwestern University’s Office of Human Resources partners with the Budget Office in setting the salary increase budget.  The salary increase budget includes monies needed for merit increases, equity/market adjustments, and adjusting our salary structures. The OHR completes a thorough data collection and analysis process leading to the recommendations on salary increases for the fiscal year.    These recommendations then become an important piece of the University’s larger annual financial and budgeting exercises.   

Following are the key pieces of information that are gathered and reviewed by the Office of HR: 

The Office of Human Resources participates in several salary planning surveys during the year and receives the results of those surveys.  These surveys are conducted by independent, third-party consulting firms which compile all results from the general industry as well as higher education and NU’s peers.  The consolidated results provide information on what level of salary increases and salary structure adjustments are being forecasted for the upcoming fiscal year. The OHR gathers and reviews data from the competitive market including NU peers as well as the general labor market.  The assessment of the competitive market and the salary increase projections of our peers and general market trends weighs heavily on the final recommendations.    

There is also a review of historical data from both the general market as well as NU peers by the Compensation team.  The team looks at both NU’s merit budget levels and salary structure movement compared to the general market and NU peers.  This review provides insight into how NU salary increase budgets have compared over the last several years and ensures we remain competitive over time.      

The Compensation team, in partnership with Talent Acquisition, reviews recent trends in turnover data, vacancy and hiring activity.  A review and analysis of this information provides the opportunity to identify unwanted trends in the data and take proactive steps to correct.  There is also a review of off-cycle pay increases over the last year and their financial impact.  

Using the competitive data and historical analysis, the Compensation team models various salary planning scenarios and considers the financial implications of each.   

Finally, the Office of Human Resources makes a fiscally responsible, competitive recommendation to University leadership on the following components of the salary increase budget: 

This information then becomes part of the University’s larger financial and budgeting exercise.  The approved budget is then provided to the Office of Human Resources and is used for our annual salary increase planning process.