Compensation forecasting last year by corporations may be considered an investment rather than a pressured spend. It was an easy win for both workers and companies who believed higher compensation would lead to acquisition and retention of talent. Fast forward to current time, much of those compensation investments are transforming into necessity as inflation across all life spends have people looking to earn more.
According to new survey data by Salary.com, Sixty-seven percent of companies are “very concerned” and 31 percent are “somewhat concerned” about elevating inflation rates eroding employee compensation and making it seem that the compensation workforce investment is really just a cost of living increase. This survey was conducted between Feb. 25-March 7, 2022 and had 1,173 responses with titles ranging from executive to individual contributor, and across five company size ranges.
“Companies are investing in merit increases at the highest levels in recent memory,” said David Turetsky, Vice President of Consulting at Salary.com. “Most organizations (73%) are now targeting four percent or more of the payroll budget for merit increases, whereas just last fall, the majority were targeting three percent. This is a notable pivot, but time will tell if it’s enough to combat inflation levels that have soared to the highest point since 1982.”
Workers are not keeping quiet. The Salary.com survey also reports that 69 percent of companies say their employees have shared their concerns with all levels of management. Acting quickly as a talent retention concern, companies are beginning to respond.
“Despite their best intentions, 80 percent of companies told us they don’t feel their efforts are helping them retain employees,” said Turetsky. “Thanks to these historic inflation rates, the Great Resignation may continue for a while longer.”
Doling out pay increases to those workers feeling pain at the pump is a simple talent retention exercise. Planning and executing additional workforce talent acquisition spends are usually managed a quarter or two in advance. Now with the need to hire more workers, compensation committees are working overtime to pay for this year’s new talent.
According to the Q2 ManpowerGroup Employment Outlook Survey (NYSE: MAN) of 41,000 companies reported increased hiring optimism into the second quarter of 2022. These executive survey respondents report stronger hiring intentions than this time last year with greatest demand in IT, Finance, and Manufacturing. Demand for skilled workers remains at record highs as employers seek to attract and retain the best, diverse talent as employers embrace the post-pandemic era.
“Labor markets around the world are looking strong for Q2, with hiring outlooks back at pre-pandemic levels in most countries,” said Jonas Prising, ManpowerGroup Chairman & CEO. “Any impact of the Ukraine crisis is not reflected in employer hiring intentions. While Poland and neighboring countries are dealing with the humanitarian crisis, we must be poised to help resettlement and employment efforts for refugees, adapting roles and requirements to fill vacancies and create new opportunities.”