Moving Through 2022 and Beyond
The current competitive landscape for talent has been well documented in the vast majority of publications. In order to ensure that you are able to recruit and retain the talent that the organization needs to drive success, there are several people related systems and processes that should be reviewed, including:
Transparent performance management programs, and
Compensation that is competitive with the external market and internally fair and equitable.
Atwater Martin has received inquiries regarding pay and appropriate base pay budgets for the upcoming compensation planning season. Last year, most organizations across all industries were planning base pay budgets from 2.5% - 3.3%. However, as you have seen in your organization, much has changed since that data was collected in 2021.
In reviewing several sources, base pay budgets are leaning toward 4% and some higher. World at Work (WaW)conducted a “Salary Budget Quick Poll” which confirms that organizations have evaluated the environment and are increasing their previously planned salary budgets to address the current labor market and inflation. The poll, which had more than 200 compensation professional respondents, reported an average salary budget increase of 4% average and 5% median. Additionally, Pearl Meyer polled 339 companies and found that 2022 increases to base salaries will surpass 4% for all employee groups combined. Of the organizations with higher projected increases than was originally expected earlier in 2021, 40% reported increases greater than 5%. Gallagher’s Labor Market Inflation Indicators for 2021-2022 reports that given their model, they are advising 2022 salary budgeting in the 3.5% to 4.0% range and structure increases a percentage point below the salary budget increase rate. The WaW article also stated that Mercer’s research found that the percentage of employers providing increases of 3.5% or more doubled between its August and November pulse surveys from 13% to 27%. Another source, comprised of compensation and HR professionals, is leaning toward 3.0-3.9%.
But, Recruitment and Retention is not always about money…..So, what can you do? Consider the following:
Give your employee a voice by conducting surveys or focus groups to determine areas that can be improved; prioritize and then address. Get employees at all levels involved.
Make sure you provide significant rewards for your highest performers.
Review employee development programs in the organization. There are other methods of development outside of attending a class.
Consider career opportunities through career ladders and broadening current roles.
Develop an organization and employee aligned performance management program.
Ensure pay is competitive with the external market and internally equitable. Pay particular attention to current internal employee pay when bringing in new hires.
Utilize recognition programs…..often! Keep an eye on the percentage of distinct employees being recognized. Spread the wealth.
Saying “Thank You” is free.
We hope you found this information helpful in determining how to move forward through 2022 and beyond. Thank you.