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This year may be your chance to get a big raise.
As employers try to retain talent amid the “Great Resignation,” many of them expect to pay more in salaries and/or bonuses.
In fact, 51% of human resource leaders in the U.S. said their organization expects average merit increases of more than 5%, a survey from professional services firm Grant Thornton found. In addition, 68% said their company already increased the number of employees eligible to receive a cash bonus. The firm polled 551 senior U.S. HR leaders of companies that had at least 500 employees in August.
“We’re seeing just massive upward pressure on wages,” said Tim Glowa, a principal at Grant Thornton who helps companies better understand, attract and retain employees.
“Wages are, in many cases … kind of the table stakes, a situation that organizations have to get right in order to attract and retain people.”
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While not every company will be giving 5% raises, it’s expected that, in general, there will be steeper wage increases in 2022. The Conference Board, a New York-based think tank, is predicting a 3.9% jump in wage costs for firms, which includes pay for new hires. That’s the highest rate since 2008.
To be sure, changing jobs typically brings a bigger salary boost than staying with your current employer. Those who switched jobs saw 12-month moving-average wage gains of 4.3% in November, compared to 3.2% for those who stayed, according to the Atlanta Federal Reserve.
Many Americans have already quit their jobs, with a record 4.5 million walking away in November alone, and some experts anticipate quit rates will accelerate this year. Of the HR leaders Grant Thornton polled, 60% think the war for talent will last more than a year.
“This isn’t just an HR problem anymore. It’s a C-suite problem,” Glowa said. “We’re seeing more organizations needing to work together as a leadership team … to figure out what they can do to retain talent.”
While pay is a driving factor for many workers, it is not the only one. A separate Grant Thornton survey of 1,500 full-time U.S. employees found that 51% would give up a 10% to 20% salary increase for more flexibility in when and where they work.
Therefore, employers should take the time to assess the priorities of their current workers, said Kim McNeil, knowledge advisor at the Society for Human Resource Management.
Additional benefits can also be a way to address inflation concerns, since rising consumer prices are expected to continue alongside wage increases, McNeil noted. In November, inflation surged 6.8%, the fastest rate since 1982.
“This includes work and schedule flexibility, additional time off, benefits that address dependent care, access to mental health and well-being benefits and financial literacy,” she said.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.