There’s no question that 2022 has been a roller coaster year when it comes to the ever-evolving workplace. We’ve seen a shift to remote work, inflation, layoffs, and now predictions of a possible recession. In fact, the International Monetary Fund (IMF) predicts global growth will slow to 2.7% next year, with their most recent World Economic Outlook Report stating that “the worst is yet to come, and for many people, 2023 will feel like a recession.”
For employees, that will mean asking for promotions, raises, or even looking for positions with higher salaries to help them keep up with inflation. At the same time, employers have been instituting cost-cutting measures by reducing certain employee benefits. For example, in 2022, companies offering paid maternity leave (other than what is legally mandated) decreased to 35% from 53% in 2020, according to SHRM’s employee benefits survey. However, one area that most likely won’t be on the chopping block is health benefits. According to the data, 88% of employers say health-related benefits are the most important type of benefit that an organization can offer its workers.
So, what does the future hold for employee pay and benefits in 2023?
Here are our top five predictions:
With cost-of-living increases and the war for top talent in full swing, compensation must remain competitive. According to Chris Fusco, SVP of Compensation at Salary.com, “2023 promises to be another banner year for employees seeking salary increases.” A new Salary.com report finds that almost half of U.S. employers plan higher salary budget increases next year compared to 2022. The survey also reveals that 2023 will see a median raise of 4%, with a quarter of employers planning to award increases of 5-7%. At GoToro, we analyze how our customers’ salaries stack up against their competitors using our internal data. This allows us to give customers an advantage when competing for candidates with companies advertising for similar roles.
A report from Mercer finds that more than 60% of U.S. employers are looking to enhance their employee benefits next year to attract and retain talent. That includes providing personalized offerings that address employees’ individual needs. Today’s workforce is extremely diverse, with five distinct generations working side-by-side. As a result, the benefits most important to a single Gen Z employee may be very different from those of a Baby Boomer approaching retirement. Therefore, companies are moving away from a one-size-fits-all approach in favor of more flexible benefits. One unique offering that GoToro sponsors is a financial wellness benefit provided through our partner Immediate. We have found that earned wage access is personalized and unique at attracting and retaining talent.
Pay transparency will continue to take center stage in 2023. According to Harvard Business Review, by the beginning of next year, “a fifth of all U.S. workers will be covered under pay transparency laws, a trend that experts predict will continue to grow.” Moving forward, employees should expect greater clarity and communication around compensation. Some examples include how their efforts are rewarded and how their role contributes to the company’s success. Through GoToro’s internal database, we have been able to help customers establish viable and competitive pay ranges within the market. Our 10+ years of experience has concluded that job advertisements that disclose pay upfront have a larger advantage when trying to attract candidates. Ultimately, organizations that prioritize having ongoing open and honest conversations about how they determine compensation will attract the best talent.
Financial wellness perks
Given the effects of inflation, market volatility, and a possible recession, workers are understandably stressed about their finances. That’s why financial wellness benefits are now the most desired employee benefit, followed by mental health benefits. In fact, according to the 2022 Wellness Barometer Survey, 54% of employees named financial wellness their number one most desired benefit, up from 29% in 2021. Another reason financial wellness benefits are essential is that managing personal finances can be complex and overwhelming. In addition, it can be difficult to know what online resources are accurate and credible. Instead, employees prefer to trust their employers to provide perks like investment tools, financial education, and access to a financial advisor. At GoToro, we know firsthand just how effective offering financial wellness can be through our partnership with Immediate. At no cost to the employer, Immediate gives employees access to earned pay ahead of time. Learn more about how financial wellness tools help improve employees’ quality of life and company retention, all which can only positively impact business.
Mental health benefits
Even before the pandemic, millions of Americans struggled with burnout and mental health issues. Unfortunately, with the stressful events of the last several years, those numbers have risen even higher. In fact, a new report from Aflac shows that employee burnout is now on par with levels at the height of the pandemic. And given the current economic uncertainty combined with recession fears, it’s predicted that employees’ mental health will continue to decline. As a result, mental health benefits will continue to be a priority in 2023.
“Bonus point” benefits
With many different benefits offered to employees, the intangible benefits of career development and employee input are consistently overlooked. Employees want to see a growth path and want to feel heard as a productive part of a company’s ecosystem. Providing mentorship programs and ensuring managers conduct “one on ones” with each employee is a critical component to employees’ satisfaction and retention. According to the Human Capital Institute, 51% of organizations with strong coaching cultures report a higher revenue than similar companies. Although some may not want to invest in the cost of these programs, the long-term positive impact on the organization as a whole is well worth the price tag. LinkedIn’s Workplace Learning Report stated that 94% of employees said they would stay at a company longer if they were offered more opportunities to learn and grow. Here at GoToro, our conversations with successful talent acquisition departments have helped us determine that these “bonus point” recruitment and retention strategies have had a major impact on the retention and development of employees. Companies who take the time to invest in the long-term growth of their employees see higher retention rates, improved performance and an overall more positive work environment.
Forward-thinking employers acknowledge the need to address employee pay and benefits holistically. This approach includes focusing not only on physical well-being but also on mental health, and financial and career development benefits. By listening to your employees’ needs and responding with innovative solutions, you will be better positioned to attract, engage, and retain a motivated and productive workforce.
If you have any questions about this article, or if you want to see how GoToro can help you implement these strategies to supercharge your digital recruitment, contact us here.