June 28, 2022
Retention as Primary Factor Driving Base Salary Increases
Last year, I blogged about Pearl Meyer’s quick poll on how workforce base salaries might climb higher in light of record inflation & high turnover rates. In May, Pearl Meyer conducted another quick poll with 337 companies to see whether those expectations were implemented – and it looks like 70% of the companies’ salary increases were higher in 2022 compared to 2021. Of those 70% with higher salary increases, the primary factor driving the increases were retention concerns (at 44%) followed by the higher cost of living and rising inflation (30%). Here is an excerpt of the key findings:
– After more than two decades of very flat total base salary increases hovering in the low 3% range, 2022 increases were 4.8% for all employee groups combined. Moreover, total increases were over 4% for two-thirds of survey participants, and over 6% for a quarter of organizations.
– Results indicate that organizations responded to this perfect storm of record inflation, high turnover rates, and a shortage of labor by providing more generous increases as a tool to attract and retain talent.
– This very timely survey reports that about one-third of organizations are considering or planning to provide mid-year salary increases in 2022. Historically, mid-year increases have been rarely used so this will be an interesting trend to watch. Most companies are giving thoughtful consideration to mid-year increases and are providing them to key employees, targeted job families, and top performers rather than granting increases across the board.
– Emily Sacks-Wilner