Find out what steps global employers are taking to address inflation.
The great resignation. Unprecedented inflation. An impending recession. Any one of these would put significant pressure on a company’s compensation budget and 2023 planning. And, while increasing pay remains a top response, many of the 1,000 companies who participated in our recent, global, Real-time Insights Survey have taken the lessons of the COVID pandemic to heart, utilizing desires around flexible working and upskilling to meet current and prospective employees where they are and not always where the employer wishes them to be.
Aligned with findings from early 2022, 8 in 10 companies continue to cite labor shortages as a significant or moderate HR priority. While employee attrition (“the great resignation”) continues to have an impact across all industries and geographies, technology (34%), engineering and science (29%), and sales, marketing and product management (25%) job roles are seeing the highest turnover.
Pay remains the top reason for leaving. In 6 of 10 companies, dissatisfaction with pay or the ability to get higher pay at a different company was a top driver of turnover. Where dissatisfaction with pay is the number one turnover issue, companies are conducting a wholesale review of rewards structures (57%) and offering retention bonuses (30%). The results of such efforts remain unclear, however, as only 13% see a decrease in turnover rates when actions around pay are implemented.
With burnout (25%) and personal reasons (35%) joining pay to round out the top three reasons for attrition, companies know that attracting and retaining top talent goes beyond salary. Indeed, flexibility and hybrid working remain in high demand. That being said, the majority of workers have returned to work (61%) and 44% of companies say their employees express happiness with the arrangements. Interestingly, only 50% see significant compliance with the company’s return-to-work/flexible working policies.
In addition to flex working, more companies are communicating the full value of the total rewards package (41%), implementing different pay structures for different teams or roles (20%), adding long-term incentives across more career levels or jobs (15%), and including premiums for specific skills (13%).
With high inflation continuing to drive up the cost of living, just 19% have factored inflation into their 2023 salary planning budgets. However, half (51%) have yet to determine their approach, as many companies are just beginning their compensation planning discussions. Other actions taken in 2022 to offset inflation include off-cycle wage reviews (42%), separate market adjustments (14%), and lump-sum payments (13%).
Globally, among the almost 1,000 employers surveyed, 61% have a moderate concern of a recession occurring, with 13% citing it as a significant risk. However, the potential for a recession has not yet impacted HR and talent management investments, with just 30% planning or already reducing investments across all HR/talent management areas.
Specifically relating to changes to talent acquisition practices, some are now only hiring for critical roles (30%) and adding additional layers of approval for hiring (26%).
While many companies continue to struggle with labor shortages, high attrition, and compensation budgeting challenges, the survey data proves the “stickiness” of lessons learned from the pandemic years. Namely, that challenging moments can give rise to innovative approaches (pay for skills) or uncork willingness to adopt existing solutions (total reward strategies) and that the employee experience, the value prop, remains the true north of business resilience.
Find out what steps global employers are taking to address inflation, the great resignation and the impending recession from Mercer's Real-time insights survey.