2023 Will Be a Costly Year to Attract and Retain Talented Employees
A recent study conducted by multinational consulting firm, Willis Towers Watson (“WTW”), shows employers are preparing for large raises in 2023, to go on top of the massive 4.1% average increases they doled out this year. In fact, next year many employers may be faced with handing out the biggest raises in almost 15 years.
What’s driving this trend?
A tight U.S. labor market combined with historic inflationary pressures is causing employers to plan on the highest pay increases since 2008. According to the WTW survey, about two-thirds of surveyed employers plan to award raises in 2023 that are larger than this year.
Nearly all of the 1,400 U.S. based employers surveyed said they are experiencing trouble hiring and retaining workers. Current Federal data supports these claims as the unemployment rate remains below 4%, and job openings outnumber unemployed workers by almost 2 to 1.
In addition to increased salaries, employers are offering better benefits and “perks” to attract and retain current workers. The WTW study shows approximately 7 in 10 employers have enhanced workplace flexibility and about one-half have increased sign-on bonuses and long-term incentives.
As the second half of the year ascends upon us, prudent business and HR executives should budget accordingly. For the past two plus years, in the midst of COVID-19, it has been difficult to attract and retain talented employees, and unfortunately, it does not appear 2023 will be any better.
Brody and Associates works closely with management to develop and manage employee and executive compensation and benefit programs. If we can be of any assistance in your organization’s 2023 compensation planning, we stand ready to assist.