Should I give my people raises to match rising inflation?
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We know inflation is affecting many employers and employees right now. David Watson, Product Marketing Manager at Zenefits, shares what you need to know about inflation — and advice for how to handle pay accordingly.
1. The state of inflation and the talent market
The annual rate of inflation in the United States hit 6.8% in November 2021, the highest in more than 3 decades, as measured by the Consumer Price Index. Payscale’s 2022 Compensation Best Practices report found that 85% of organizations are concerned about rising inflation and 76% of organizations experienced labor shortages or difficulty attracting talent in 2021.
2. Approaches to compensation
With talent so hard to come by and inflation so high, should you increase compensation to retain your current employees and attract new ones? Some organizations raised their minimum salaries at the beginning of 2022, while others chose not to. Companies have also opted to give bonuses to account for rising inflation.
3. Metrics to monitor
The best approach will depend on your situation. David recommends paying attention to a few metrics to guide your decision. First, keep an eye on the Consumer Price Index, which is a measure of the average change in prices paid by urban consumers for a market basket of goods and services. Additionally, track your company’s attrition rate and identify trends. If you notice certain roles or departments are more impacted than others, you can act accordingly.
For more help addressing compensation in light of inflation, watch the video below.
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