Starbucks will provide a uniform 2% pay increase to all salaried North America employees this year, replacing manager-discretion merit raises and excluding hourly baristas. The policy applies to corporate staff, manufacturing and distribution workers, and store managers. CEO Brian Niccol has tightened return-to-office rules and asked executives to limit costs while directing investments toward service improvements, shorter wait times, and more inviting stores. The 2% raise trails U.S. inflation and average salary budget increases reported by surveys such as Payscale, which found average salary budgets rose about 3.6% this year.
Starbucks CEO Brian Niccol is ditching a merit system in favor of a uniform 2% pay raise for all salaried employees in North America this year. The move comes as the coffee chain looks to limit costs while investments are funneled into turnaround efforts. Compensation experts tell Fortune salary slowdowns are common amid economic uncertainty, but the 2% rate lags behind the national average.
The flat 2% pay raise is a shift from the company's previous compensation model that let managers weigh in on how much of a raise their salaried direct reports received. The salary hike, first reported this week by Bloomberg and confirmed by Fortune, will apply to all salaried employees, including corporate employees, workers in manufacturing and distribution, and store managers. The uniform increase will not apply to baristas, who are hourly employees.
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