The need for companies to benchmark salaries is greater than ever.
It’s the season for annual planning and budgeting, and many chief financial officers (CFOs) are being urged to increase employee compensation in the year ahead for both new hires and existing staff. In many cases, CFOs have already been asked to bolster their companies’ salary budgets for the remainder of the year. A survey by The Conference Board found that U.S. employers have adjusted their total salary increase budgets for 2022 upward, from 3.6% to 4.1%.
That same survey found that the total salary budget increase is likely to rise further in 2023 — to 4.3%. If that happens, it would be the highest bump since 2001. These plans are being set because many leading employers recognize that their employees are dealing with high inflation and its impacts. According to Bank of America’s 2022 Workplace Benefits Report, 71% of workers today are concerned the cost of living is outpacing their growth in salary — and compensation is the top driver for resignations.
Compensation Conversations Aren’t a Matter of If, But When
Those few CFOs who aren’t yet feeling pressure to increase employee compensation should prepare themselves: Raise requests are coming — and soon.
Research for Robert Half’s 2023 Salary Guide found that 55% of U.S. professionals already feel underpaid, and 48% of workers plan to ask for a raise by year-end. Also, 56% of professionals are more likely to request a higher salary today compared to 12 months ago.
Some additional facts for CFOs to weigh as they consider how (or whether) to adjust their employee compensation strategy come courtesy of the Bureau of Labor Statistics, whose data shows that U.S. employers are still struggling to staff millions of open positions, millions of workers are still quitting their jobs every month, and the pool of skilled workers available for hire remains exceedingly shallow.
So, the need for companies to benchmark salaries is greater than ever. But what if you find after your analysis that your business can’t quite meet what your competitors are willing to pay for in-demand talent for certain roles in your industry or local market? These three strategies can help:
1. Invest in Growing Employees’ Skills
LinkedIn’s 2022 Workplace Learning Report notes that 46% of employers are prioritizing upskilling and reskilling this year, and more than a quarter (26%) are investing in digital upskilling. Expanding these opportunities can be a good move — and should be considered part of your company’s talent retention efforts. Employees who feel valued and invested in by their employer and can visualize their future in the organization will be more inclined to stay.
Upskilling and reskilling efforts should be relevant and future-forward. For instance, think about how employees in your finance and accounting organization could benefit from learning how to work with advanced analytics, artificial intelligence and machine learning — and even quantum computing, which some already predict could change financial services. Equipping your staff with that type of cutting-edge knowledge could provide your business with a significant competitive advantage, too.
2. Provide Perks and Benefits That Enhance Employees’ Lives
If you haven’t done so already, it’s time to reimagine your company’s perks. Topping the list should be flexible work arrangements. Even if your business is one the few that doesn’t intend to embrace a remote or hybrid work model for the long term, you need to accept that employees coming back to the office full time still need — and now expect — schedule flexibility.
Wellness programs and mental health resources are also coveted perks for most employees today. So, too, are financial wellness programs. Ninety-one percent of employers responding to Bank of America’s aforementioned survey said they see higher employee satisfaction when they offer tools and resources to help workers manage their financial well-being.
Also, there’s no getting around offering standout benefits in a highly competitive hiring environment. In fact, over two-thirds of U.S. employers plan to enhance their health and benefits offerings in 2023 to improve talent attraction and retention, according to research from Mercer.
3. Reward Professionals Who Clearly Demonstrate Their Value
This final tip for employers is also meant to be a bit of a reality check for employees. If workers want to earn a higher salary, then they should commit to positioning themselves for a raise.
That includes volunteering to take on new responsibilities outside of their job description, proactively identifying ways to add value to or solve problems for the company and prioritizing their skill development. Earning in-demand certifications also helps — such as the CPA, Certified Management Accountant (CMA) and Certified Internal Auditor (CIA) designations for finance professionals.
If budget constraints prevent your organization from committing to raises, even for high-performing employees, consider other measures such as offering spot bonuses or perhaps amplifying perks further. You could offer additional vacation time, for example, or financially support continuous learning opportunities, like helping employees pay for earning certifications such as those mentioned above.
Don’t Wait for Employees to Bring Up Compensation
More frequent performance reviews can keep managers and employees in alignment on what a worker needs to do to earn the level of compensation they aspire to, for example. Also, employee surveys allow management to stay on top of how workers are feeling about the company’s overall offerings, from salary to perks to company culture, and make swift adjustments as needed.
CFOs should consider working closely with people leaders in the organization, including the chief human resources officer (CHRO), to formulate strategies like these that will help ensure the company is making a concerted effort to keep employees feeling valued and satisfied.
