Human Resources and job recruiting professionals have come to expect hiring constraints as part of the new normal. As the double whammy of high inflation and high turnover makes the old way of doing things less sustainable, organizations are looking for methods to keep hiring and retention top of mind. The catch, if there is one, is keeping employees happy without raising salaries, which become a permanent part of a company’s bottom line.
Just over one-third of all organizations said they plan to adjust compensation to account for inflation, according to a survey from Gartner, Inc., an advisory firm. The survey found only 13% planned to adjust compensation for all employees.
Compensation Budgets
Salary increases are often the call of finance chiefs who are tasked with setting compensation budgets, not human resources. One determinate for an increase is if a company can pass along those higher salary costs to customers. But even if that’s possible, CFOs are often resistant to raise salaries as a hedge against the possibility of higher inflation and deteriorating economic conditions.
Wages vs Inflation
Although spending on wages and benefits in the corporate sector rose in 2021, this was often the result of the high number of resignations, according to the U.S. Labor Department. But wage adjustments have not kept pace with the cost of living, which continues to rise across the board. Consumers throughout the U.S. and the world are dealing with record levels of inflation.
Significant increases in the cost of food, gas and consumer goods also continue to make it difficult for consumers to maintain the same or similar standard of living. Plus, salaries and benefits are often benchmarked against competitors rather than being reflective of current economic conditions.
Alternatives to Wage Increases
Companies that do not plan to raise wages are exploring other options to retain and engage employees. This includes countering salary freezes with additional vacation days and permanent work-from-home options. Other options might include the following:
- Additional vacation time.
- Daycare reimbursement.
- Tuition reimbursement.
- Office equipment subsidy.
- Guaranteed severance package.