Employees may finally be getting some financial relief
Nearly two-thirds (64%) of employers in the United States have budgeted for higher employee pay raises than last year, according to a report from Willis Towers Watson (WTW).
Currently, employers are projecting a salary increase of 4.1% for 2023, slightly up from the 4% actual increase employees got this year. These are the largest increases since 2008.
Two-fifths (41%) of employers have also increased their budgets since original projections were made earlier this year, and just 45% are sticking with the pay budgets they set at the start of the year, according to the survey of 22,570 employers worldwide, including 1,430 organizations in the U.S., conducted in April and May 2022.
Read more: Gap VP of HR: ‘If we’ve been bickering about the wage, let’s fix that’
Also, more than one-third (36%) of employers have already increased or plan to increase how often they raise salaries. Among them, 92% have or will adjust salaries twice per year.
“Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive,” said Hatti Johansson, research director, Rewards Data Intelligence, WTW.
“With such a dynamic environment, it’s imperative for organizations not only to have a clear compensation strategy but also a keen understanding and appreciation of the factors that influence compensation growth. And, if an organization is planning to increase budgets, it’s best to be prepared as to how to award and communicate pay changes as quickly and effectively as possible.”
Nearly three-quarters (73%) of respondents cited concerns over the tighter labor market as the main driver for higher budgets, while 46% cited employee expectations for higher salaries driven by inflation, according to WTW. Meanwhile, 28% said the adjusted budgets are in anticipation of stronger financial results.
As many as 80% of tech workers are considering looking for another job, and more than half have actually applied for one in the past month, Blind reported in March. Also, more than 4.42 million Americans quit their job in April, according to the U.S. Bureau of Labor Statistics.
However, fewer employers expect to have difficulties attracting talent next year. While 94% of employers have this experience this year, only 41% expect to do so in 2023. Also, while 89% of employers reported difficulty retaining workers this year, only 60% expect to have this problem next year.
This may be due to the fact that employers are turning to different methods now to retain talent:
- 58% have broadened their emphasis on DEI to retain more talent, and over 26% are planning or considering doing so.
- 50% have increased the flexibility for remote work, and 25% are planning or considering doing so in the future.
- Almost 40% have changed their compensation programs (e.g., base salary and short- and long-term incentive plans), and another 35% are planning or considering doing so.
- Over 36% have made changes to improve their employees’ experience, and 45% are planning or considering doing so.
“With a possible recession looming, continued high inflation and employers grappling with talent supply challenges, organizations need to get more creative to address attraction and retention challenges,” said Catherine Hartmann, global practice leader, Work, Rewards & Careers, WTW. “The workforce is composed of a diverse employee population, each with their own unique dynamics. Employers are challenged to meet their preferences and needs while delivering on a superior employee experience for all.”
In May, the Cosmopolitan of Las Vegas surprised its more than 5,000 employees with a one-time $5,000 bonus.
PricewaterhouseCoopers US, part of a global network of professional services firms operating under the PwC brand, will invest $2.4 billion into its people experience over the next three years.