Wage hikes could solve the ‘Great Resignation’

Despite a looming recession and a cost of living crisis, employees remain undeterred and are continuing to quit their jobs in droves.

US Bureau of Labor Statistics (BLS) data found that 4.2 million Americans resigned in June 2022. This is only slightly down from 4.3 million in May, and a record high of 4.5 million in March.

This so-called ‘Great Resignation’ is making it very difficult for employers of all shapes and sizes to attract and retain their workers. Research by WTW found that 61% of North American employers are having difficulty hiring hourly workers, whereas 66% are having issues recruiting professional employees.

This data was based on a survey of 884 North American employers about their experiences in the first half of 2022.

What’s the solution?

As a result, “employers are leaving no stones unturned in their battle to find and keep talent,” according to WTW’s North America lead for work, rewards and careers Lesli Jennings.

They are particularly rethinking their pay and reward programs. 86% of employers said they were now hiring at the higher end of salary ranges. In addition, 81% are introducing sign-on bonuses, 65% are now offering retention bonuses, including 84% to managers.

Beyond pay, 84% have introduced the flexibility of where and how people work – asynchronous work is becoming more and more popular – and 55% are improving training opportunities for workers.

It is very promising that employers are taking action on flexibility and learning given these have been proven in other studies to be core causes of the ‘Great Resignation’.

Jennings added: “While making enhancements to compensation programs can support employers’ immediate recruitment and retention efforts, employers recognize they will need to pull levers in addition to compensation and reinforce a connection to the overall employee experience.”

However, WTW’s research found that employers aren’t stopping there. They are continuing to look at what else they can do as the ‘Great Resignation’ rages on.

The data showed that 44% of companies are planning or considering to boost their current salary budgets – in fact, 23% have already done so. 31% are considering or planning on introducing more frequent pay rises – 7% are ahead of the curve here.

Talking about the survey, Catherine Hartmann, global practice leader for work, rewards and careers at WTW, tells UNLEASH: “The most surprising results of the survey are the magnitude of reactive compensation measures and continued investments organizations are taking in light of potential further declines in the economy and that more companies are not yet scaling back.

“This momentum remains in-tact despite [continued economic challenges in the US], which illuminates that companies seem to be steering clear of past tactics of decreasing compensation budgets, and providing variable payouts for only a few.

“Instead, given labor market supply and demand, most organizations are continuing to do what it takes to attract and retain talent into 2023.”

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