North American employers are reevaluating their employee compensation strategies as they struggle to find and keep employees in several key areas.
Two-thirds of employers have increased hiring activity in 2022, according to the WTW 2022 Mid-year Compensation Survey. However, about the same percentage of respondents are having difficulty attracting and retaining employees with digital skills and professional employees, and more than 60% are having problems hiring and keeping hourly employees.
“Employers are leaving no stones unturned in their battle to find and keep talent,” says Lesli Jennings, North America leader, Work, Rewards and Careers, for WTW. “While making enhancements to compensation programs can support employers’ immediate recruitment and retention efforts, employers recognize they will need to pull levers in addition to compensation and reinforce a connection to the overall employee experience.”
The survey reveals the following actions employers are taking to help attract and retain employees:
- 86% are hiring employees at the higher end of salary ranges.
- 84% are increasing flexibility in where and how employees work.
- 81% are offering sign-on bonuses to attract talent.
- 65% are using retention bonuses to keep employees. Organizations that are enhancing the use of retention bonuses are most likely to target such bonuses to managers (82%) and professionals (80%).
- 55% are increasing training opportunities.
Employers also are revising their salary budgets in an effort to hire and keep workers:
- More than 4 in 10 respondents are planning or considering boosting their current salary budgets, and 23% already have done so.
- Nearly half are planning or considering adjusting salary budgets throughout the year on an as-needed basis, and 22% already have.
- More than 3 in 10 respondents are planning or considering making more frequent salary adjustments throughout the year. Seven percent already have.
- Nearly half of respondents are planning or considering adjusting salary ranges (such as minimums, midpoints and maximums) more aggressively. Eighteen percent already have done so.
“While talent challenges may seem especially acute now, employers must consider the long-term implications of their actions, particularly around the sources of funding for higher compensation and concerns over internal equity between rewards for new hires and rewards for employees of longer standing,” says Lori Wisper, leader, Work and Rewards Global Solutions, for WTW. “Salary compression is a real issue for many employers, and our survey results show that it could continue with hiring employees in the higher salary range.”
“Employers can take actions to address these concerns, such as refining their overall compensation philosophy, raising salary ranges and reviewing or rethinking their strategy on how work gets done and rewarded.”