Plan Ahead:Compensation Strategies for 2022
September 21, 2021
Have you increased salaries in 2021 in response to market pressure?
It’s poll time!
How will your 2022 salary increase budget compare to your 2021 budget?
It’s poll time!
4
Agenda
• Guiding Principles
• Total Rewards Focus
• Salary Increase Data and Trends
• Range of Pay
• Recommendations and Next Steps
Guiding Principles
What is your talent landscape?
• Are you able to successfully recruit to fill open roles?• If so, are you able to do so within
your current pay structure? Are there internal equity or compression issues with your current employees?
• Are you able to retain your current employees?
• Are you experiencing geographic/remote work pressures?
How have your budget and financials
changed this year?
• Does your organization have the financial ability to pay for additional market increases this year?
• If so, are they increases across your organization or more targeted?
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More Guiding Principles
• What is the outlook for your industry and your talent pool?
• What is your total rewards philosophy? What is your compensation philosophy?
• What are your compensation priorities?• Pay equity, rewarding high performers, at risk talent
Total Rewards HaloTM
Salary Increase Data & Trends
The Pandemic & Salary Increase Budgets
Economic impact on businesses
Positive impact = 21%
Negative = 46%
No impact = 33%
Salary increase budget impact
Positive impact = 16%
Negative = 9%
No impact = 76%
Source: World at Work Salary Budget Survey 2021-2022
3.3%increase to the national
total salary budget increase
Source: World at Work Salary Budget Survey 2021-2022; Payscale 2021-2022 Salary Budget Survey
2.3%inflation as of June 2021
Source: World at Work Salary Budget Survey 2021-2022, Bureau of Labor Statistics
Growth in Salary Increase Budgets
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2009 2010-2014 2014-2018 2019 2020 2021 - Actual 2022 -Projected
Source: World at Work Salary Budget Survey 2021-2022
Behind the Numbers
Type of Program What’s Changed?
Average Merit Increases 2.9% (up from 2.6%)
Percent of Employees Receiving an Increase 87% (up from 84%)
Average Promotional Increase 8.8% (same)
Use of Variable PayIncreasing – 81% to 89% of employees received a variable pay payment
Amount of Variable Pay PaymentsOrganizations are projected greater payouts than budgeted.
Source: World at Work Salary Budget Survey 2021-2022
Do you have plans to adjust your salary structure for 2022?
It’s poll time!
2.1%projected salary structure increases
(a return to pre-pandemic levels)
Source: World at Work Salary Budget Survey 2020-2021
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Foundation – Median and Mean
MeanAverage (add all numbers and divide by the number of numbers)
MedianThe middle value in the set of numbers
Example5, 7, 8, 10, 10, 10, 10, 20, 25
• Mean = 105/9 = 11.67
• Median = 10
Industry Trends
Actual 2021 Projected 2022
Mean Median Mean Median
All Industries 3.0% 3.0% 3.3% 3.0%
Agriculture, Forestry, Fishing & Hunting
2.5% 2.5% 3.0% 3.0%
Construction 3.3% 3.0% 3.4% 3.0%
Finance & Insurance 2.8% 3.0% 3.2% 3.0%
Healthcare & Social Assistance
2.9% 3.0% 3.2% 3.0%
Manufacturing 3.0% 3.0% 3.3% 3.0%
Source: World at Work Salary Budget Survey 2021-2022
Industry Trends
Actual 2021 Projected 2022
Mean Median Mean Median
All Industries 3.0% 3.0% 3.3% 3.0%
Professional, Scientific, Technical Services
3.2% 3.0% 3.4% 3.2%
Public Administration 3.0% 3.0% 3.2% 3.0%
Retail Trade 2.4% 3.0% 2.8% 3.0%
Transportation and Warehousing
2.5% 2.8% 3.1% 3.0%
Source: World at Work Salary Budget Survey 2021-2022
Geographic Trends
• Very consistent among state and metropolitan region• 3.5% in Seattle, Atlanta, and San Diego (higher
than total salary budget increase mean)
• 3.4% in Chicago, Cincinnati, Denver, Los Angeles, Miami, New York, Phoenix, Portland, San Jose, Tampa
• The rest are right around 3.3%
• Internationally, all countries reported higher salary increase budgets.
Source: World at Work Salary Budget Survey 2020-2021
Geographic Trends
Actual 2021 Projected 2022
Mean Median Mean Median
National 3.0% 3.0% 3.3% 3.0%
Indiana, Illinois, Ohio, Colorado, Missouri, New York
2.9% 3.0% 3.3% 3.0%
California 3.0% 3.0% 3.4% 3.0%
Source: World at Work Salary Budget Survey 2020-2021
International Trends
Projected 2022 Actual 2021
Canada 3.0% 2.7%
Mexico 5.0% 4.7%
Brazil 4.9% 4.3%
United Kingdom 2.9% 2.5%
India 9.2% 8.7%
China 6.0% 5.5%
Japan 2.8% 2.5%
Russia 6.1% 5.5%
Source: World at Work Salary Budget Survey 2021-2022
• Zeros are not included in international data (mean).
Organization Size Trends
Salary increase budgets continue to be greater in smaller organizations.
Actual 2021 Projected 2022
Number of Employees Mean Median Mean Median
1-499 3.2% 3.0% 3.5% 3.0%
500-2,499 3.1% 3.0% 3.3% 3.0%
2,500 – 9,999 2.9% 3.0% 3.2% 3.0%
10,000 – 19,999 2.9% 3.0% 3.2% 3.0%
Source: World at Work Salary Budget Survey 2021-2022
How much does "pay-for-performance" factor into your salary increases?
It’s poll time!
Pay-for-Performance
Continued differentiation for high performers, even with smaller budgets in 2021
High Performers Middle Performers
Mean Median Mean Median
% of employees estimated to be rated in this category in 2021
26% 20% 69% 70%
Average merit increase estimated for this 2021 performance category
4.0% 4.0% 3.0% 3.0%
Source: World at Work Salary Budget Survey 2021-2022
Salary Budget Increases
Actual 2021 Projected 2022
Mean Median Mean Median
General Increase/COLA 1.1% 0.8% 1.6% 2.0%
Merit Increase 2.6% 3.0% 2.9% 3.0%
Other Increase 0.8% 0.5% 0.9% 0.8%
Total Increase 3.0% 3.0% 3.3% 3.0%
Source: World at Work Salary Budget Survey 2021-2022
• General increase/COLA, Merit and Other Increases do not add to the Total Increase because not every organization provides all three types of increases.• The amounts are generally consistent across employee types (nonexempt, exempt, executives).
Variable Pay Programs
85% of organizations are using variable pay
Nonexempt -Hourly
Exempt –Salaried
Officers -Executives
2021 – Avg % Budgeted 5.6% 12.6% 37.4%
2021 – Projected % Paid 5.9% 13.6% 39.5%
2022 – Projected % Budgeted 5.6% 12.7% 37.6%
Source: World at Work Salary Budget Survey 2021-2022
• Numbers reported are the “mean.” Nonexempt does not include union employees.• Variable pay is defined as compensation that is contingent on discretion, performance or results achieved (“pay at risk” such as bonuses, commissions, incentives).
Do your managers (or those making compensation decisions) have a good
understanding of how to use the range of pay?
It’s poll time!
Range of Pay
How to Use Range of Pay
COMPAREthe job, looking at job
descriptions – not titles
How to Use Range of Pay
COMPAREthe job, looking at job
descriptions – not titles
DECIDEwhere you want to be in the
range (your philosophy)
How to Use Range of Pay
COMPAREthe job, looking at job
descriptions – not titles
PLANyour course of action, which may be a multi-year strategy
DECIDEwhere you want to be in the
range (your philosophy)
Evaluating “Market” for Pay
Consider the implicit meaning behind the full range of pay reflected in the benchmark data.
MINIMUM MIDPOINT MAXIMUM
Competitive Pay at Midpoint
MINIMUM MIDPOINT MAXIMUM
Competitive Pay at Midpoint
MINIMUM MIDPOINT MAXIMUM
Fully functional and consistently demonstrates skill and experience needed for the job.
Competitive Pay at Midpoint
MINIMUM MIDPOINT MAXIMUM
Fully functional and consistently demonstrates skill and experience needed for the job.
> 1 year to many years to develop skills for success
Competitive Pay at Minimum
MINIMUM MIDPOINT MAXIMUM
Competitive Pay at Minimum
MINIMUM MIDPOINT MAXIMUM
Someone new to the role and still developing skills and experience to be successful in the role.
Competitive Pay at Minimum
MINIMUM MIDPOINT MAXIMUM
Someone new to the role and still developing skills and experience to be successful in the role.
New to the org. or industry, no transferrable experience or recently promoted
Competitive Pay at Maximum
MINIMUM MIDPOINT MAXIMUM
Competitive Pay at Maximum
MINIMUM MIDPOINT MAXIMUM
Experts in their role and paid top of the market
Competitive Pay at Maximum
MINIMUM MIDPOINT MAXIMUM
Experts in their role and paid top of the market
Highly tenured, high performers and key talent with critical skills or deeply relevant experience in the org.
Evaluating “Market” for Pay
Keeping your compensation philosophy and these factors in mind, determine the appropriate place with the range.
MINIMUM MIDPOINT MAXIMUM
New to the role, industry or
organization
Demonstrates skill and experience
needed for the job
Tenured, high performers
and key talent
Do you have a defined compensation philosophy?
It’s poll time!
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Guiding Principles
1. What is your talent landscape?
2. How has your budget and organization’s financials changed this year?
3. What is the outlook for your industry and your talent pool?
4. What is your total rewards philosophy? What is your compensation philosophy?
5. What are your compensation priorities?
Recommendations & Next Steps
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Recommendations
✓ Focus on high performers in competitive jobs first (e.g., IT and niche skills)
✓ Look at pay equity and adjust as needed
✓ Re-examine variable pay programs
✓ Use the entire range of pay – and educate your managers around the range of pay
✓ Get clear on your total rewards philosophy and employee value proposition
✓ Communicate and create transparency
Maximize Your Total Rewards Strategy
Leverage the Total Rewards Halo framework to meet your talent and business goals.
Schedule a call with me!We can help.
Megan Nail | VP, Total Rewards Practice
317-501-6164
linkedin.com/in/megannail