Salary budgets reach a 20-year high

With record high rates of inflation impacting the lives of employees, many are asking for higher wages. On top of that, the ‘Great Resignation‘, which has seen millions leave the workforce, is pushing employers to introduce more attractive compensation packages in an effort to retain and attract the best talent.

These factors have led to budgets for pay rises to grow at a 20-year high. At least, this is what WorldatWork has found after speaking to 2,113 organizations across the world.

In the US the average wage growth budget has increased to 4.1% in 2022, and this is projected to be the case in 2023.

This increase may not surprise employees. After all, a WorldatWork Salary Budget Quick Poll in January 2022 discovered that more than half of organizations had increased their 2022 salary growth expectations over the last six months. 49% said they were doubling their budget.

Discussing the findings, director of compensation strategy at WorldatWork, Sue Holloway, commented: “The rapid rise in salary increase budgets over the past couple years, combined with today’s volatile economic environment, challenge HR professionals to leverage data and think strategically as they formulate 2023 compensation budget recommendations and negotiate with chief financial officers.”

Retaining talent

While many companies are already raising wages in an attempt to keep staff who are under pressure from the cost of living crisis and sky-high inflation, are there are other ways to improve the lives of employees that are less costly?

Aviva head of workplace savings and retirement Laura Stewart-Smith noted: “Financial education in the workplace is nothing new, but now more than ever, there is a fundamental need for employers to provide tailored support for employees to ensure they can genuinely thrive,” in response to 26% of UK employees being concerned about finances.

On top of education programs, employers can look at what wellbeing programs they have. Whether it’s mental support or physical incentives, being healthy can be a huge benefit to employees and may just make them stay.

Flexibility can also help engage and retain staff. Those with commitments to a family will undoubtedly appreciate being able to work on a schedule that suits them, and giving this up will take into serious consideration.

HiBob’s vice-president of content experience Zoe Haimovitch noted in a blog post: “HR leaders of mid-sized companies will have a difficult time, on the one hand, keeping their teams and, on the other hand, recruiting new team members if they don’t build a company culture that allows for flexible work models.”

While there are many avenues to explore when it comes to retaining staff, it is clear that finances are changing. But before the well dries up, organizations should consider what cost-effective benefits they can offer employees.

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