Providing competitive compensation is more important than ever in 2023. Rising inflation and changing employee expectations are among the top reasons why.
According to the 2022 National Salary Budget Survey by Survey.com, approximately 50% of US employers plan higher year-over-year budget increases for 2023 as compared to 2022. The typical 3% raise will be replaced with a median raise of 4%. One-quarter of employers plan to give raises of 5%-7% next year.
As a result, your HR team should plan for higher-than-usual salary increases throughout the year. Updating your salary strategies can increase the effectiveness of your employee attraction and retention efforts.
Discover how following the latest salary trends helps you know what to pay your agricultural employees in 2023.
Inflation, the Labor Market, and Salaries
Increasing inflation raises the amount of money employees spend on groceries, gas, housing, utilities, medical costs, and other expenses. As a result, a 2022 Gartner HR survey showed that 63% of executives plan to adjust compensation accordingly.
The ongoing competition for top talent is impacting salaries and benefits for current and potential employees. Mercer’s Health & Benefit Strategies for 2023 report shows that more than two-thirds of US employers plan to enhance their health insurance and other benefits next year to attract and retain employees. This includes better healthcare access, more affordable medical care, and increased family-friendly benefits.
Salary Transparency Laws
Pay transparency laws will impact states such as New York, Colorado, and California in 2023. Companies must provide good faith estimates for salary ranges of job openings. For instance, if a company posts a salary range of $80,000-$250,000, the company could face city or state penalties.
Pay transparency is designed to build trust between companies and current and potential employees. This encourages candidates to apply for job openings.
Many employers will offer employee bonuses to increase their competitive positioning. Pearl Meyer states that 5% to 20% of employers will provide higher base salaries, cash bonuses, or equity-based incentives. This helps reward employee performance and provide support for rising expenses.
Higher Compensation for Current and Potential Employees
Capterra’s 2022 New Hire Premium Survey found that 65% of hiring managers reported that their company’s starting salaries were higher than usual because of inflation and talent shortages. This frustrated current employees as they struggled to keep up with the increasing cost of living.
As a result, HR leaders should regularly audit employee compensation to uncover discrepancies between new and tenured employees. The gaps should be closed when possible.
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