However, in 2022, more than three out of four
employers enhanced base salaries
ROLLING
MEADOWS, Ill., Sept. 7,
2022 /PRNewswire/ -- Compensation trends now struggle
to keep up with rapid market changes, rising minimum wage
thresholds, and recruitment and retention objectives. In fact,
Gallagher's 2022 U.S. Career Wellbeing Report found that
three in four (78%) employers surveyed raised their base salaries
at nearly two times the rate of other total rewards. This strategy
stretches pay scales to attract workers but also creates a wage
compression.
"Many employers are now paying more for the employees they have
and those they want in the midst of price inflation and an
extremely competitive labor market," said William F. Ziebell, CEO of Gallagher's Benefits
& HR Consulting Division. "While compensation is the key
bargaining chip when attracting and retaining employees,
market-driven increases may bring financial consequences for
employers and their customers. Higher pay on its own isn't likely
to sufficiently and sustainably raise engagement levels or lower
turnover rates."
Increases to total base pay amounts in FY 2022 exceed
projections for FY 2023
Salary adjustments have
largely taken their usual forms in FY 2022.
- The most popular salary increases include merit increases (76%)
and market adjustments (68%)
- About one in three employers have budgeted for salary range
(33%) or internal equity (32%) adjustments in FY 2022
- FY 2022 average total base pay increases were the lowest for
executives (3.8%), slightly higher for management and other exempt
employees (4.0%), and highest among those who are non-exempt
(4.4%)
-
- FY 2023 average total proposed increases range from 3.4% for
executives to 3.6% for other employee groups
Nearly half of employers budget for promotional increases in
FY 2022
Organizations also used promotions to reward
employees.
- Promotional salary increase budgets grew 0.7 points from FY
2021 to average 3.8% for FY 2022
-
- Projections for the next fiscal year are 3.7%
Variable pay has edged up 1–4 points across all employee
groups in FY 2022
Employers linked variable
compensation to organizational success as a tool to prevent
accruing the amount to base pay, while at the same time helping to
avoid long-term costs.
- Incentives apply more often to executives (37%) and management
(34%) then they do to employees in other exempt (29%) or non-exempt
(26%) roles
- Average base pay used for variable compensation in FY 2022 is
25% for executives, up from 21.8% in FY 2021
- For management, the average base pay used to determine variable
pay is 13.2%, up from 12.5% in FY 2021
-
- Looking to FY 2023, initial plans for variable pay incentives
either remain the same as last year (62%) or are not yet determined
(21%)
Use of lump sum awards is similar to FY 2021
- Lump sum awards have replaced base pay increases for 37%
of organizations
-
- Most recipients are employees who have already reached their
salary range maximum (31%)
Engagement surveys are growing
Employers can
increase employee enthusiasm, satisfaction and job effort by
clearly understanding and better managing engagement
drivers.
- Nearly half (48%) of employers have used an employee survey
within the previous two years, compared to 41% in 2019
- Another 21% expect to do so moving forward, which is a 3-point
increase from 2021
- Large employers (67%) are twice as likely to conduct an
engagement survey than small employers (33%)
- Measuring factors such as career mobility and fair compensation
are integral to driving and sustaining engagement
-
- Current drivers for employees include confidence in the
organization, trust in senior leadership, connections with
management and career development
"Compensation, benefits and flexible policies and practices work
better together when they address engagement drivers and
retention," said Ziebell. "Evaluating the drivers of workforce
engagement and retention, understanding how they differ and
implementing a supporting strategy is a key component of success.
The more they closely align, the more likely they are to support
work-life balance. In addition it creates a more rewarding employee
experience, which is a win-win for all."
Gallagher's 2022 U.S. Career Wellbeing Report is
part of the Workplace Trends Report Series. It's based on data
compiled and analyzed from two annual U.S. employer surveys: The
2022 Benefits Strategy & Benchmarking Survey,
collected from more than 4,000 employers in the U.S. across a wide
variety of industries from December
2021 to March 2022. And our
latest Salary Planning Survey, collected from approximately 1,170
participants between March and April
2022. The report can be found here.
ABOUT GALLAGHER
Arthur J. Gallagher
& Co. (NYSE:AJG), a global insurance brokerage,
risk management and consulting services firm, is headquartered in
Rolling Meadows, Illinois.
Gallagher provides these services in approximately 130 countries
around the world through its owned operations and a network of
correspondent brokers and consultants.
Contact:
Mary Schwartz,
Gallagher
847.378.5893
mary_schwartz@ajg.com
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SOURCE Gallagher