With recent labor shortages and inflation on the rise, business owners are being forced to reevaluate their compensation planning. As it stands, employers struggle with attracting and enticing new hires, as well as structuring salary increases to keep current employees satisfied. A recent report by Payscale, a pay data firm, unveiled key insight from management-level decision-makers across the country when hiring and paying employees amid this unprecedented workforce. DM Payroll Solutions shares highlights from the report for you to consider during your business’s compensation planning.

Record-Breaking Inflation Increases

This January, inflation was nearly 8% higher than it was a year earlier – the highest it has increased in a year in nearly 40 years. According to the report, 44% of businesses surveyed intend to give pay raises higher than 3% this year, which is up from 33% in 2019. However, these pay increases are not on track to keep up with the current inflation, as the true value of wages is on a steady decline compared to the continuing rising prices. Many employers are left worrying if their planned raises will suffice, or if their current employees will seek a new opportunity given the hot hiring market. In an effort to attract new hires and engage current employers, many employers have turned to offer new incentives, including:

• Remote work options
• Remote work stipends
• Flex-time
• Mental health and/or wellness programs (such as gym memberships)

The Importance of Pay Transparency

In another recent survey, employees across the board reported a lack of pay transparency within their organizations and showed concern for pay equity. Among 561 employees polled, only 23% admitted their employer is transparent about the pay structure within the organization and allows for salary-related questions. Nearly half of employees do not believe they are paid fairly compared to individuals in their role at other organizations, and over a third of employees do not feel they are paid fairly compared to individuals within their own organization.

With the current workforce environment, the importance of pay transparency is more important than ever. Payscale’s study stated 66% of employers plan to implement pay equity analyses this year, with 52% intending to conduct gender and race-based analyses.

When assessing pay equity within your organization, your HR team must leverage both internal pay data as well as market data for similar work to determine internal pay gaps. As gaps are established, you can then create a cohesive strategy for pay equity throughout each employee’s tenure within your company.

DM Payroll Solutions’ advanced reporting capabilities can run wage reports and assist you in detecting pay gaps within your organization. To learn more, contact us today.