You might think that the combination of high inflation, labor shortages, and a talent war would be a winning trio for any employee who wants a bigger paycheck next year.
Many companies are also reporting solid, if not record, earnings. “Staff say, I’ve been working hard at scoring.” There is an expectation that more of that has to go [them]said Brian Krupp, head of research at consultancy Gartner’s HR Practice.
In general, HR consulting firms see employers offer compensation increases of 5% to 10% in a wide variety of jobs, but especially in areas where workers are most needed, in which case these increases can extend to 20% .
But it wasn’t an all-out phenomenon, and it probably won’t be next year.
Inflation increases alone will disappoint
Inflation may be at its highest level in 30 years, but that doesn’t mean employers feel obligated to cover your increased costs.
To the extent you’ve been making cost-of-living adjustments in the past, that 1% to 2% annual increase isn’t likely to budge for the next year.
That’s because increasing your base salary is a permanent increase in fixed costs for employers, Krupp said, and they’re not going to raise their salaries at a steady pace with historically high inflation, especially since they might think it might calm down next year.
So who will be in line for more real money?
But for many workers, their salary increases — including salary increases and bonuses — will be higher than inflation. And for some, that’s largely the case.
The most pressing concern of employers is to attract and retain talent for important roles. Chief among these are supply chain leadership and technical functions related to the supply chain, as well as roles in digital marketing, data analytics, artificial intelligence, engineering, and cybersecurity, said Katherine Hartmann, North American Business and Rewards Practice Leader at HR Consulting. Willis Towers Watson Company.
It also includes hourly workers in distribution warehouses and in restaurants or other industries that have responded for assistance and cannot afford to lose the employees they already have.
What employers have found is that wage increases aren’t always enough to fix the problem, Krupp said, noting that one restaurant chain promised to hire anyone $3 an hour more than they currently earn but that the chain still had to do so. Close some sites. Another company, he said, gave all IT workers a 10% raise but found that did not reduce department turnover.
“There is a massive amount of wage inflation because there are not enough people in the labor market to hire,” Krupp said.
This is especially true when it comes to those with technical skills, because all companies, not just those in technology fields, are vying to hire them.
If you play a decisive role, Krupp said, you are in a better position to ask for what you want, whether at your current employer or the competitor across the street, which could save you 20% to 25% more than you earned.
If your current employer wants to keep you, they may increase your base salary somewhat, but they may also offer a retention bonus to motivate you to stay. It can be all cash or a combination of cash plus stock. The payment will likely be made in installments over two years, so you’ll have to stay at the company to get the full amount, said Dave Helburn, managing partner in the human capital management practice at West Monroe Consulting.
In a recent survey of 150 executive wing executives, Hellborn found that 68% plan to offer wage and salary increases to attract and retain talent, and 46% expect to offer retention awards.
Other ways you might see more money in 2022
Your “gross” salary increase at your current job typically includes several components rolled into one: cost of living, individual and company performance, and market-related adjustments to update pay for a particular role.
No matter what your job is, Hartmann said, if you’re a strong performer, your best chance of getting a big raise from your current employer is to get a competitive offer and see if your company matches it. “Employers should address people who say ‘What can you do for me?’ I can get more money across the street. “
Hartmann also sees companies as accelerating promotional processes as a way to retain people at different levels of the organization.
While both Heilborn and Hartmann were once reserved for senior leadership, they are now seeing companies offering one-time incentives for employee retention payments at the bottom of the chain and even for some individual shareholders.
“They take their stock and push it down the organization as one-time special retention grants below the executive level, saying ‘Here’s $25,000 to $50,000,'” Hartmann said. [that will get] paid in installments.
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