Wages and Benefits: How Do Companies Stay Competitive in 2022?
As inflation rises, how can companies compete with wages and benefits to attract and keep the key talent they need?
As inflation rises and job applications go unanswered, business owners are trying many tactics to attract the workforce they need. According to Small Business Employment Watch data for November 2021, hourly wages across the U.S. saw a 4.07 percent increase over the previous November, which is the greatest percent of year-over-year increase in hourly wages posted in the ten years Paychex|IHS Markit has been tracking this information. The U.S. Department of Labor’s data shows an even higher gain in private-sector wages, with a 4.8 percent increase during that same period.
In a Wall Street Journal article, (December 7, 2021) author David Harrison noted that the increase in wages for 2022 will be “steeper” than at any point since the 2007-2009 recession. Citing the tight labor market and the highest inflation in three decades, he called out the problem employers across the country are facing, noting that, “Such a sustained rise in wages could push consumer prices higher, as companies raise prices to compensate for pay increases.”
Employers across the US, however, are realizing that increasing wages alone isn’t proving to be sufficient to attract new or returning employees to the workforce. And no one wants to contribute to what Harrison and others have described as a cycle that could, “…stoke inflation and increase the chance of a spiral of rising wages and prices feeding on each other.”
Benefits Matter for Companies and Workers
Job availability prevails while employers struggle to entice previous workers to return to their roles or new employees to join their teams. But raising wages isn’t the only strategy for attracting and retaining talented employees and sometimes it is not even the optimal choice.
After an organization benchmarks its pay scale, ensuring that it is compensating all workers from the frontlines to the back office, with the competitive wages they deserve, the next step is to evaluate Total Rewards. Total Rewards include all aspects of present and future monetary, benefits-based, or developmental rewards. Everything from a priority parking space to company stock to bonuses to paid holidays and more are components of Total Rewards.
Options to Use Wages and Benefits Competitively
Today’s work environment has plenty of challenges, which also means it is ripe with opportunities for organizations to be recognized by how well they care for and support the needs and goals of their workers.
Workforces are often multigenerational, with some work teams spanning five or even six decades in age. Although their objectives may differ, compensating workers in any stage of life with opportunities to save for retirement or other future goals, deferring taxes to a time when their tax rate potentially is lower, can be an effective way to attract and reward employees.
A well-designed deferred compensation plan, whether it comes in the form of cash, stock, or other value, may be a more attractive benefit to many workers than a moderate salary boost today. A quick call with an executive benefits consultant can help your organization identify creative strategies to reward employees in ways that go above and beyond salary and at the same time, will serve to help your company stand out in today’s competitive hiring market.
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