Press Release

Salary.com’s Annual Pay Practices Survey Finds 64% of Organizations Planning Higher Merit Increases in 2023

February 2, 2023

Compensation remains a prime lever in combatting persistent employee shortage

Waltham, Mass. (February 2, 2023) – Salary.com®’s Annual Pay Practices Survey finds 64% of organizations continue to combat labor market woes with higher funding for merit increases, a 23 percent increase from the prior year. The survey, fielded in the fall of 2022 to HR professionals, reports that 40 percent find it more difficult than last year to attract qualified candidates. Planned increases in bonuses and long-term incentives (38% and 18% respectively) remain in line with last year’s survey results.

A Commitment to Fair Pay

Most HR pros (72 percent) believe their employees are paid fairly, yet only half think their current pay policies are positioned to successfully retain employees. In the face of a growing number of states, including California and New York, enacting equal pay and pay transparency laws, more than half (56 percent) of organizations have a formal process in place to address compliance with equal pay laws, a percentage that is expected to grow. A majority (56 percent) have a compensation philosophy; however, this represents an 8 percent decrease from the year prior.

“The slight decline in the presence of compensation philosophies, while surprising given the tenor of the times, could be a result of companies revamping their pay philosophies to address the growing number of states laws requiring pay transparency,” said Chris Fusco, Senior Vice President of Compensation at Salary.com. “We expect to see the number of compensation philosophies rise next year.”

Room for Improvement: Compensation Communication and Employee Engagement

  • Of the 56 percent of organizations with a compensation philosophy, two-thirds (72 percent) directly communicate it to their employees.
  • 63 percent have a compensation plan and 60 percent of these organizations share the plan with their employees.
  • Only a third of organizations provide formal training to managers on how to communicate with employees about compensation.
  • Less than half (46 percent) of HR pros rated their organization’s employee engagement as above average; 10 percent rated it below average.

“This survey tells us that communication around pay is lagging, and employee engagement may be suffering because of it,” said Fusco. “Corporate leadership must address the dynamic of burgeoning pay transparency laws and a persistently tight labor market by pulling back the curtain on pay and training managers on how to have tough conversations. If they don’t make progress, they could face lasting consequences.”

Employee Turnover

With an unemployment rate in the 3.2 range, almost one-quarter of HR pros say their current level of turnover is causing them to miss production and delivery timelines, on par with the prior year. The highest level of turnover by region is in the Mountain States and Midwest (23 percent) and the lowest rates are on the West Coast (17 percent).

Total turnover rates by industry top out at 23 percent in healthcare, 22 percent in software & networking, and 21 percent in both hospitality & leisure and manufacturing. The lowest turnover rates are in aerospace & defense (13 percent) and business services (14 percent).

Survey Methodology

The 2022 survey compiled responses from a total of 1,012 organizations representing 21 industries. Data was collected via an online survey management tool between September 2 - October 21, 2022. Organizations ranged in size from small US-based businesses with a few employees to global organizations with greater than 10,000 employees. Responses were mostly prepared by managers and above (67 percent) and by professionals in the HR field.

ABOUT SALARY.COM

Salary.com® is the leading provider of compensation market data, software, and analytics, bringing more of the trusted data and intuitive software organizations need to get pay right. The industry’s fastest-growing compensation management company, Salary.com serves over 30,000 survey participant organizations, over 8,000 business-to-business software subscribers, and over 60 million employees globally. HR professionals rely on Salary.com’s 360° view of their compensation practices so they can efficiently and accurately achieve pay equity and adapt to market changes. Salary.com’s state- of-the-art CompAnalyst® accelerates compensation workflows, delivers real-time data, and powers accurate, equitable and competitive compensation through one intuitive platform. For more information, please visit www.salary.com.

Media Contact:

Julie Murphy
Salary.com
617-967-5426
julie.murphy@salary.com

Insights You Need to Get It Right

The latest research, expert advice, and compensation best practices all in one place.
Salary.com Recognized by Analyst Study for Strengths in Data Software
Salary.com Recognized by Analyst Study for Strengths in Data Software Press Release
Survey data reveals Salary.com popular among mid-market and enterprise-size companies

Read More

What to Look for When Choosing a Salary Survey Partner
What to Look for When Choosing a Salary Survey Partner Blog
What to look for, avoid, and be wary of when choosing a survey partner.

Read More

CompAnalyst Market Data: Smart Matches, Fast Prices, and New Insights
CompAnalyst Market Data: Smart Matches, Fast Prices, and New Insights product Sheet
The CompAnalyst Market Data platform is easier to use than ever before.

Read More

Differences Between HR-Reported and Crowd-Sourced Compensation Data
Differences Between HR-Reported and Crowd-Sourced Compensation Data White paper
To make decisions about the value of a job, you need data from a range of sources.

Read More

Salary.com Releases JobArchitect, A Tool to Align Organizational Needs
Salary.com Releases JobArchitect, A Tool to Align Organizational Needs Press Release
Salary.com released JobArchitect, a management tool to keep job descriptions up-to-date.

Read More

It's Easy to Get Started

Transform compensation at your organization and get pay right — see how with a personalized demo.