Many employers have cut down on employee bonuses and raises because of the consequences of the pandemic. One of the biggest decisions facing organizations today is compensation. With prices and inflation continually increasing, salary is expected to increase with it. However, due to the pandemic, employers are put in a tough situation because they cannot afford to raise employees' wages.
A huge reason why employees have decided to quit their jobs is because they have reassessed their current situation. By doing so, the majority of people that have quit their jobs say that it is because they can get better compensation somewhere else.
2022 Compensation Increases
In the middle of last year, most salary increase budget projects were expected to be around 3%, but now, they are expected to be around 4%. There are no signs of inflation slowing down in 2022 as the labor shortages continue.
Most of the pay increases will happen for the younger generation of employees who are under the age of 25. This fast wage growth among new hires will create pay compression, creating unsatisfied older and more experienced employees. The pay compression will force employers to raise pay across the board.
Forming a Pay Strategy
Some companies have decided to wait and see what the market does in the next few months, while others need to implement a pay strategy FAST.
- Evaluate pay decisions that were made during the peak of the pandemic. Check around with competitors and other companies to see if they continue pay practices such as hazard pay, additional leave, etc.
- Take notice of how critical roles within your organization are compensated by competitors.
- Determine the budget of the company.
- If you are hiring remote employees, consider paying employees based on the market that they live in. Based on the market information, some areas with lower costs of living than others try to compensate new employees.
- Take the employees' needs into consideration. Try to provide a benefits program that provides more options such as child care and family leave.
- Communicate regularly with the employees so they understand some of the challenges that you face.
endevis has evolved into a national talent & workforce solutions provider with offices throughout the nation. With a focus on healthcare, engineering, and IT staffing, the organization has won a handful of awards across its Professional Direct Placement, Professional Contract Staffing, and Recruitment Process Outsourcing Solutions. For more information, please email ROI@endevis.com.