It’s that time of year: performance and compensation reviews. The good news: More companies are planning to give pay raises that are bigger than 3% this year. The bad: The average raise is not really that high, all things considered.
Forty-four percent of companies plan to raise worker pay by more than 3%, according to Payscale’s 2022 Compensation Best Practices Report (CBPR). That’s the highest rate of companies giving more than 3% pay raises in six years. But it still leaves many workers with fairly paltry increases when the dramatic rise in prices over much of the past year is factored in.
In fact, about 85% of companies tell Payscale they are worried about inflation, but most aren’t giving pay increases to match it. Last month the annual inflation rate hit 7.5%, according to the latest consumer price index.
The increasing number of employers dipping deeper into their coffers comes at a time when many are facing worker shortages and high turnover. Last year, nearly half of companies reported the volume of employees quitting was higher than in previous years, according to Payscale, a compensation software and data company. Roughly three out of four companies say they’ve had trouble recruiting to fill those job openings.
“The lasting impact of the pandemic on the labor market has shown us that when it comes to pay, employers are scrambling to figure out what to offer new hires and how to structure salary increases to retain their current workforce,” Shelly Holt, chief people officer at Payscale, said in a statement.
Yet Holt says companies should look at their compensation strategies holistically. It doesn’t just mean pay increases. Nearly two-thirds of employers surveyed by Payscale provided individual bonuses, and 59% awarded company performance bonuses in 2021.
Nearly half of companies provided hiring bonuses and spot bonuses last year, according to Payscale. And on the recruitment side of things, 55% had some type of employee referral bonus program in place.
Companies also adjusted their 2022 benefits, with about a quarter more employers offering remote work options. A total of 65% of companies surveyed offer this option for workers now. Nearly one in 10 companies even offers a four-day workweek.
“What matters most to employees overwhelmingly includes things that enhance their lives, from better benefits that account for both physical and mental health to workplace flexibility and remote work,” she says.
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