6 Compensation Trends for the Year Ahead

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What do employees want in a new job in 2023? In recent years, the focus has been on a better work-life balance, more PTO and vacation time, shorter workweeks, and the ability to work remotely as needed. Some of these benefits options became hot topics following what’s now referred to as the Great Resignation. In its wake emerged the need to attract new talent in order to compensate for ongoing labor shortages.

Today, the employment landscape looks a little different. But it’s still important to have a robust compensation package to help secure new hires to fill your open positions. You may be wondering just how big your total compensation package should be to stay competitive with other organizations. A good place to start is with the U.S. Bureau of Labor Statistics.¹ According to BLS, total employer-to-employee compensation costs for civilian employees averaged $41.86 per hour in September 2022. Wages and salaries accounted for 69%; additional benefits accounted for the remaining 31%. The average was higher for government workers. Here, we’ll cover 6 employee compensation trends for the year ahead.

1. More pay transparency

Pay transparency is going to be a factor in 2023 as pay equity continues to be in the forefront. Pay gaps are often due to educational differences and differences in employee experience levels and hours worked. Still, your company may be asked to explain any that apply to current employees and new hires. Therefore you might consider demonstrating elements of fair compensation by listing salary ranges in job ads.

You might also create an internal company page that lists salary information for years of experience, education, training, and employee status. This could include additional info. pertaining to salary increases, hourly wage increases, monetary bonuses, and other incentive compensation.

2. Monetary compensation that accounts for the cost of living and inflation

Reportedly, salaries are expected to increase in 2023. The Fed may be trying to keep inflation low by raising the interest rate. Still, inflation was at 7.1% in November ’22, according to Statista. Employees will want types of compensation that account for the rising costs of food, housing, utilities, and even cars. A competitive salary or wage that addresses cost of living and other factors will enhance cash flow despite tough times.

3. More flexible hours

In order to attract the best employee for your open position, consider adding flexible hours to your job offer. Many employees will still be looking for positions that offer alternative ways to work. That will include staggered start and end times and in-office, hybrid, and remote work options. By providing multiple ways to work, employers enable employees to best optimize their time and productivity.

4. Health coverage to include medical, dental, vision and mental health

As the importance of physical and mental health remains in the forefront, employees are bound to continue seeking robust healthcare plans. This means that your company will need to look into offering comprehensive medical, dental, vision, and mental health benefits.

5. Company cultures that support employee growth and well-being

Employers who think they can’t find good employees because no one wants to work might be fooling themselves. The truth for some companies is that they can’t retain talent because no one wants to work for them.

Every day, companies are outed for any combination of off-putting attributes. These can include toxic company culture, bad pay practices, off-kilter work-life balance, and unprofessional compensation practices.

Some employers seek objective means for learning what past and current employees really think about their workplace. Those interested can search online for reviews or take an honest look at employee turnover and why employees say they’re leaving.

Looking ahead, expect employees to continue to gravitate toward companies that are known for desirable qualities. Those include having positive company cultures of inclusion and that focus on individual employees’ growth and well-being.

6. Employee training and advancement

Are you preparing your employees for the next stages of their career and advancement within your company? In 2023, employees will be looking for companies that take career advancement seriously. That means they’ll be interested in those offering both ongoing on-the-job training and external sources of training. They will value compensation for advanced degrees and classes that can help them hone and advance their skills.

Having a comprehensive compensation strategy ready for the year ahead can help you mitigate the effects of ongoing labor shortages by attracting top talent to your organization. Ultimately, a good mix of desirable employee benefits in your compensation plan can help you increase employee engagement, satisfaction, and productivity while reducing turnover and the need to replace workers.

For more on employee compensation and other aspects of HR and business management, visit Workest by Zenefits daily. (https://www.zenefits.com/workest/ )