Survey: Compensation Budgets Show Modest Increases
The balancing act between rising inflation and the high quits rate has employers taking a hard look at their compensation and benefit offerings.
According to the recently released Mercer Compensation Planning Survey, compensation budgets are expected to increase slightly in 2022.
Insights from more than 950 employers suggest a slight uptick from early 2022 projections in August.
Currently, merit increase budgets are tracking at 3.2%, while total increase budgets are tracking at a 3.5% increase.
Mercer noted incentive payouts appear to be stronger than in 2021 with one in four employers saying their overall bonus poll is more than 10% higher.
Still, most employers do not provide pay increases until the spring.
Nearly half of surveyed companies said budgets are still preliminary. Only 20% said budgets were approved by leadership thus far.
The pandemic has also pushed employers to sit on increases until the latest point possible.
According to the U.S. Bureau of Labor Statistics, consumer prices rose by 6.8% year-over-year in November 2021, the largest 12-month increase since 1982.
And with the arrival of the coronavirus Omicron variant, there are even more questions about the economic outlook for the coming months.
Mercer researchers said there are steps business leaders can take now to continue to attract and retain needed talent, starting with prioritizing your hourly workforce.
If you have not already increased starting wages for hourly employees, it may be time.
According to the U.S. Bureau of Labor Statistics, year-to-year hourly wages have increased by nearly 5%.
They also suggest closing the gaps in pay competitiveness. Below-market pay presents further talent-retention risks in the current job market.
While wages are important, researchers also suggest looking at ways to support your workforce with unmet needs, and create more supportive flexible environments for employees.
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