Salary budget increases approaching 5.0% for 2022
Back in September 2021 we shared that HR/Compensation professionals were expecting a 3.30% increase to salary budgets for 2022. This information was based on the WorldatWork.org salary increase survey published in August 2021.
A recent poll conducted by WorldatWork.org between December 14, 2021 and January 3, 2022 confirms that organizations have evaluated the environment and are increasing their previously planned salary budgets to address the competitive labor market and inflation. But this increased spending is still falling short of what the majority of responding compensation professionals say they feel is needed to stay competitive in the talent wars.
The poll, which had more than 200 compensation professional respondents, reported an average salary budget increase of 4.0% average and 5.0% median. Still, that’s about 1 percentage point shy of increases [5.0% average and 6.0% median] they say is necessary to maintain/attract needed talent.
Clearly the cost of labor is increasing. Retaining top talent needs to be a priority in 2022. Your employees have options, and many are willing to leave one career for another if it means more competitive pay. If you haven’t checked to see what the competition is paying, including competition from industries outside of your normal peer group such as retail, manufacturing, or logistics you may want to start with an objective market analysis of compensation.
Compensation studies are one of our specialties. We have deep experience with base compensation benchmarking, incentive program development, and total rewards. Check out our updates on workforce strategy and compensation or contact us for other helpful resources.