Should inflation drive your salary increases?

Aug 7, 2023

While 61% of organizations are not making a move on inflation, ca. 40% of companies intend to implement a salary raise that aligns with the inflation rate. At the same time governments are not urging a salary increase. So 71% of organizations take the option of offering a one shot bonus.

External incentives – such as bonuses – have limited effects on long-term employee motivation and, in some cases, can undermine their desire to stay.

Companies with 500+ employees are more equipped and mature to take action and resilience is more likely to be higher. However the challenge is to find the time to reflect and prioritize the right decision, as every minute is decisive for retaining trust of the workforce.

Here are 5 actions to reduce the impact of inflation:

 

1. Assess your salary and benefits data

  • Use real time data, because it helps organizations to react to employee’s needs.
  • Vary compensation options. This works more for smaller organizations. You can add some benefits such as health insurance increase, transport allowance, discount vouchers etc.

2. Develop a communication plan to promote transparency

  • veryone should feel appreciated, valued, informed and heard. Communication is the key to success! Leaders should communicate with employees regularly.
  • The last few years have changed a lot in the working culture. Workforce became more emotional and stressed. So: Show empathy!

 3. Review compensation processes while ensuring fairness

  • Identify weak spots e.g. gender bias in pay or salary inequity in similar roles.
  • Conduct salary reviews – despite good or bad economic times.
  • Develop comprehensive anti-bias training for managers and leaders.

 4. Supply educational materials for more equality among the workforce

  • Entrust managers to have honest conversations.
  • Have a transparent structure of your organization, so the employees know in case of questions whom to ask.
  • Offer some external resources such as workshops. This support can contribute to the continuity of fairness and unbiased approaches within the workplace.

 5. Enhance employee wellbeing by offering personalized support

  • Listen to your employees, e.g. make anonymous surveys. This approach allows employees to express their thoughts and come up with ideas to improve.
  • Support in case of mental health issues.

Our opinion

In conclusion, organizations with transparent policy and workforce-friendly environments can maintain a clearer oversight on budget and hence, retention.

Do you need guidance and/or support in brainstorming and implementation benefit and incentive measures in our company? Then contact us to find your HR partner to cope with this challenge.

Sources:

 

* Figures

 

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