With minimum wage on the rise, inflation increasing and annual merit pay season here or closely around the corner, HR Full Circle recently ran a round-up of the 2022 compensation landscape. We thought we’d share a summary of our findings here. Sources are listed at the bottom of the article. Employers who claim to pay cost of living adjustments (COLA increases) should take note, and order up a double for the coming year.
A more modern practice is to base pay on company and individual performance, offering larger increases or incentive pay to top performers, or a combination of market adjustments plus performance-based pay components.
Base pay findings:
• Over 90% of US companies planned salary increases for 2022.
• Only 3% of US companies planned not to give raises, as opposed to 8% in 2021.
• With high inflation, companies are encouraged to provide “real wage” increases to workers that overcome inflation.
• Average base pay salary increases averaged 3% in 2022, up slightly from 2.7-2.8%. High-tech companies averaged 3.1-3.3%.
• More companies than ever (12%) gave 4-5% salary increases.
• Top performers (according to performance review ratings) earned 4.5% base pay increases. A surge in demand for labor and a shortage workers and specific professional and premium skills is fueling the larger than average salary increases.
• Workers can earn an average pay increase of 5.8% by changing jobs and working for another employer.
Bonus and incentive pay findings: • Almost 90% of companies planned bonus or incentive compensation in 2021, up from 76% in 2020.
• Bonuses are generally tied to company and/or employee performance goals, averaging 16% of salary for management and professional employees. Bonuses for support staff and production and manual labor employees averaged 8% and 5.5%, respectively.
Benefits findings: • On average, benefits account for 25-35% of total employee compensation (smaller employers on the low end, larger employers offer more benefits on the high end).
• On average, employers pay 70-83% of health insurance premiums (for single insurance coverage), with employees paying 17-20% on average.
• Health insurance typically accounts for about 8% of total employee compensation.
Sources: Willis Towers Watson 2021 Salary Budget Survey of 1200 U.S. Companies; The Conference Board’s Salary Increase Budget Survey of 180+ U.S. organizations; Society of Human Resource Management Salary Survey; ADP Research Institute; WorldatWork’s 2021-2022 Salary Budget Survey
Kelly Gust is the CEO of HR Full Circle, a Springfield-based consulting firm that provides talent management and human resources consulting to organizations of all sizes and stages.
This article appears in Fall 2022 August 2022.
