The business environment and headlines of unprecedented turnover of the past year have helped to elevate the importance of differentiating an organization’s employment brand and total rewards to attract and retain the workforce and critical skills needed to succeed. Companies must now consider these factors when changing any aspect of employee compensation, health, welfare or retirement benefits -- or any other reward programs for 2023.
These news stories can create motivation for employees, leading them to think that if they aren’t leaving their current organization, or asking for promotions or pay raises, what other time in their careers would be right? These considerations can be stressful for those leaving a company as well as those who choose to remain. Company leaders are further challenged if they don’t understand the rationale for the organization’s reward programs or if the programs constrain their ability to respond to employee desires.
The statistics behind the headlines are astounding. We have had a record number of employees leave organizations, as well as the workforce in general – a trend that is approaching a year and a half in length. Labor participation rates are beginning to come back from the initial decline. -- companies have reported rates percent of nearly 80%.
The shortage of available labor has been a catalyst for rising wages, leading many employers to allocate their labor costs across cash, non-cash reward elements and creating new additions to their headcounts.
Wages have increased at a rate above 5%, but with rising inflation, that feels more like a loss of more than 3% in purchasing power. Finally, while companies are positioned to begin making programmatic and financial commitments to their future total rewards programs, at least for 2023, they are doing so in an uncertain economic climate where growth appears to be modest at best and other leading economic indicators and a tighter monetary policy could dampen economic growth.
Navigating a path forward
The sample timeline below illustrates what many human resource and total reward leaders are thinking about as they head into year-end planning, deciding what efforts are needed to deliver programmatic changes to reward elements to close the gap on the unmet needs of their workforce.