Employers Budget for Raises in 2023 – But Money Isn’t Everything

Like their counterparts across the country, most West Michigan employers plan to raise wages to attract workers in 2023. At the same time, however, employers are increasingly emphasizing a wide range of strategies with a straightforward goal – retaining and engaging the workers they have now.

These are among the findings from a pair of TalentFirst pulse surveys of the region’s HR leaders late last year, including:

  • 90% of respondents budgeted for wage increases in 2023
  • A wide range of non-monetary benefits also are being offered to retain workers
  • The most common benefits are leadership and skills training
  • Employers also are providing mental health benefits and wellness perks

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The expectations for wage increases reflect national trends. Among TalentFirst respondents who planned pay raises, the most common budgeted increase was in the range of 3% to 3.9%, slightly less the 4.6% nationwide average predicted in a survey by consulting company WTW.

An Emphasis on Retention

Rising salaries have drawn a lot of attention, and for good reason: HR leaders nationwide say inadequate compensation remains the No. 1 driver of employee turnover. However, in West Michigan and across the country, pay increases are being coupled with an increased emphasis on non-compensatory benefits designed to retain existing workforces.

Hatti Johansson, research director for reward data intelligence at WTW, told SHRM: “As inflation continues to rise and the threat of an economic downturn looms, companies are using a range of measures to support their staff during this time.”

This range, in the survey of West Michigan HR leaders, includes multiple upskilling and career development supports. Employers provided an average of seven learning and development opportunities – investments that studies show pay off in better retention, longevity and engagement.

TalentFirst cited some of these advantages in our recent Talent Solutions Playbook (PDF), including that 94% of employees say they would stay at a company longer if their employers invested in their career, and that hiring new workers can be twice as expensive as upskilling existing workers.

Employer Brand and Other Best Practices

Employers increasingly recognize that, in a persistently tight labor market, they need a variety of approaches to attracting, developing and retaining talent. Employee engagement is a key component to a successful talent strategy, and attention to employee wellbeing is a necessary element of a highly engaged employee culture.

The importance of employee engagement was emphasized at a recent presentation to the Economic Club of Grand Rapids by Jon Clifton, CEO of Gallup, who observed: “People who are thriving at work are enthusiastic and passionate about what they do every day. They enjoy working with their colleagues, have development opportunities, and feel cared about as a person. People who have quietly quit are psychologically detached from their jobs — they put in the time without energy or passion.”

West Michigan employers who recognize the importance of employee wellbeing are taking steps to address the holistic wellbeing of individuals in their workforce, TalentFirst’s pulse surveys show.

In addition to learning and development opportunities, West Michigan HR leaders cited supports such as mental health services, crisis intervention, resource navigation, hybrid work arrangements, flexible schedules, and substance use recovery. Other supports listed: ESL and literacy education, financial planning, housing placement, and more.

Such offerings are important to employer brand – the perceptions of culture, values, and work environment that help draw top-tier talent and convince that talent to stay. This was another strategy covered in our Talent Solutions Playbook, and it will be the subject of an upcoming session of our related Talent Solutions Series, Employer Branding, on Feb. 15.

The expertise shared by West Michigan HR leaders has been essential to the success of the Talent Solutions Series and other TalentFirst initiatives. Their contributions – through pulse surveys and other collaborations – provide valuable insights from the front lines of our efforts to make this a top region for talent attraction, development and retention.

We look forward to expanding on that relationship with our upcoming launch of an HR Council. Contact Carly Smyly to learn more.

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