2022 was yet another year of surprises that required employers to flex and adapt. The digitalization of work continued to accelerate. Inflation rates soared. The war for talent has been different than in the past. And while the need to pay employees for duties performed remained the same, employers had to reassess how much they pay for roles and how to manage their pay budgets effectively and efficiently.
WTW’s Salary Budget Planning Report – Global (December Edition) revealed that most organizations increased salaries and salary budgets in 2022 to rates that haven’t been seen in nearly two decades. While simply increasing salaries may seem like an easy fix to deal with current economic and labor conditions, that approach can be shortsighted and cause future budget issues. Significant changes to salary budgets and plans require more rigor during your salary review process. With bigger dollars at stake, the decisions you make need to be more defensible than ever.
This is where a WTW client found themselves in early 2022. A global Fintech firm was trying to address the impact of shifting economies and tighter labor markets on its pay strategy. The company’s Compensation Director committed to two things:
Both objectives required in-depth information about the industry’s salary increase budgets, the global and regional economic environment, and the current employment landscape. The Compensation Director knew the data was available to conduct this analysis, but they also needed to make quick decisions that would be perceived competitive and fair at every level of the organization. The director decided to partner with WTW, which committed to delivering the data quickly and accurately, taking the organization’s unique situation into consideration.
Turnover is on the rise in Fintech, and organizations around the world are finding it harder to attract and retain key digital talent. For the Compensation Director, it was important not only to address attraction and retention, but also to pinpoint the talent pools that needed the most attention.
To answer this question, WTW conducted a comprehensive analysis of the organization’s historical salary data for jobs in the digital space and compared that to salary data from comparable organizations and markets, acknowledging that digital roles are industry-agnostic.
As such, we formed a broader comparator group to include finance, tech and cross-industry markets. We also leveraged WTW’s Salary Budget Planning Report, which provided both an extensive database of market pay trends as well as employment trends in the comparator groups. By reviewing details from the Salary Budget Planning Report and looking at a year-over-year analysis from WTW’s global compensation surveys, we were able to show the Compensation Director that digital marketing roles were the most critical among support and infrastructure jobs, and cybersecurity and full-stack development roles were the most critical among tech jobs.
With this newfound intelligence, WTW was able to help the Compensation Director map the best path to distributing their salary increase budget in a way that would maximize their potential to attract and retain key digital talent.
Again, we leaned on WTW’s Salary Budget Planning Report for data about the economic environment and salary budget practices in the regions in which the organization operates. Globally, we reviewed the impact of inflation rates, GDP growth, unemployment, and talent attraction and retention trends. At the market level, we looked at actual salary increase rates and salary review practices over the course of several years and considered forecast plans.
We also examined WTW’s annual compensation surveys to explore how comparable organizations are differentiating incumbents’ annual base salaries and compared the distribution of salary increase budgets for critical roles. For example, we compared salary increase budgets for full-stack development roles against budgets for all tech roles in Fintech.
Our comprehensive approach helped the Compensation Director with the salary review process in two significant ways:
Establishing a macro governance for their salary review process enabled the Compensation Director to deploy a consistent and global salary strategy. As the war for talent shifts, with intensity ebbing and flowing, it is critical for organizations to focus on what matters most to their growth and survival. Basing decisions on sound, well-rounded and objective data is the best way to navigate talent challenges efficiently and effectively.
