Editor’s Note: These are the final results of WorldatWork’s “Salary Budget Quick Poll,” which was conducted Dec. 14, 2021, through Jan. 3, 2022.
WorldatWork’s “Salary Budget Quick Poll” 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% average and 5% median. Still, that’s about 1 percentage point shy of increases (5% average and 6% median) they say is necessary to maintain/attract needed talent.
WorldatWork’s “2021-2022 Salary Budget Survey,” which was released in August, reported 3.3% average and 3.0% median for 2022 planned salary budget increases.
“Retention of top talent is a top priority and addressing compression and internal equity with the higher attraction salaries adds to a challenging compensation landscape,” said Alicia Scott-Wears, compensation content director at WorldatWork. “With the flood of resignations and the inflation reports released, it is not surprising that compensation professionals and organizations as a whole are having to reassess the salary budget spend in addressing the issues that have plagued the last six months.”
The “Salary Budget Quick Poll” is part of WorldatWork’s ongoing efforts to provide members with the most current and relative data to help navigate these rapidly changing times.
More than half of respondents have increased their 2022 salary budgets in the past six months — 5% by more than 2X and 49% by up to 2X. Almost all report difficulty in attracting/retaining talent with 23% reporting it “very difficult” and 71% “somewhat difficult.”
- Pearl Meyer’s “2022 Projected Base Salary Increase Quick Poll” of 339 companies found that 2022 increases to base salaries will surpass 4% for all employee groups combined. Of the organizations with higher projected increases than was originally expected earlier in 2021, 40% reported increases greater than 5%. Approximately half of respondents anticipate 2022 base pay increases to be higher than what was originally expected earlier in the year, with 12% expecting increases to be significantly higher.
- Gallagher’s Labor Market Inflation Indicators for 2021-2022 report notes: “Wage and salary increase models which gradually taper salary growth throughout 2022 from its current 4.6% rate down to a 12-month 3.0% rate (equivalent to that experienced in Q1 of 2021) yield an overall average 12-month percent change rate of 3.7% for 2022. Given these models, we advise 2022 salary budgeting in the 3.5% to 4.0% range and structure increases a percentage point below the salary budget increase rate.”
- Mercer’s research found that the percentage of employers providing increases of 3.5% or more doubled between its August and November pulse surveys from 13% to 27%.