New survey data released by executive compensation consultancy Pearl Meyer show that 70% of organizations implemented larger salary increases this year compared to 2021, with 21% reporting "significantly higher" levels. When polled in November 2021, companies expecting larger increases indicated an average of 4.2%. The data show actual implemented increases were even higher than anticipated at 4.8%.
"When we asked similar questions at the end of last year, just about half of the respondents thought they would be implementing higher than normal salary increases and 12% said it would be significantly higher," said Rebecca Toman, vice president of the survey business unit at Pearl Meyer, and executive sponsor of the new research. "This latest dataset tells us far more companies than expected took action in raising workforce pay, and even those who expected to offer more ultimately gave larger increases than they had planned."
The survey found many companies took action to raise workforce pay, and even offered larger pay increases than planned.
Respondents indicated the biggest driver behind their decision was concern about retaining employees, followed closely by rising inflation. "Employers are definitely taking these steps to curb the 'great resignation,' but they are also taking seriously the pressure employees are facing with the cost of living," noted Toman.
The survey also indicates 23% of companies are planning mid-year salary adjustments in addition to their annual cadence and an additional 8% are considering the action. "It is very unusual to see so many companies planning a second round of adjustments," said Toman. "Normally, budgets are set well in advance for an annual rise. This is further indication that a shift is occurring—at least for now—when it comes to setting pay for the established workforce."
- 70% of responding organizations reported higher salary increases in 2022, compared to 2021
- 21% reported "significantly higher" salary increases
- Of those reporting higher salaries in 2022, 44% said retention concerns were the primary factor for the decision, with 30% noting higher cost of living/rising inflation
- Data show that percentage-wise, there is very little difference in the amounts granted based on employee category, from executive to nonexempt
- 23% indicate they are planning for a mid-year salary adjustment process and 8% are considering it