Dive Brief:
- Half of HR leaders rank compensation as their biggest challenge in 2024, according to Payscale’s 2024 Compensation Best Practices Report. This beats out recruiting (44%), retention (42%) and engagement (37%).
- Raises are expected, but may be lower than in 2023, and fewer entities plan to increase pay, the March 20 report found: Organizations are predicting an average base pay increase of 4.5%, compared to 4.8% actually given last year. Also, in 2023, 86% of organizations increased pay, but this year, only 79% say they plan to do so.
- Additionally, pay transparency is “officially a best practice,” as 60% of organizations now publish salary ranges in job ads, up 15% over last year, according to the report, which was based on survey data from 5,735 respondents between October and December 2023.
Dive Insight:
“While the economy may be in flux, employee expectations have not swayed,” Payscale’s Chief People Officer Lexi Clarke stated in a release.
Pay transparency is an example: 27% of organizations say employees are asking more questions about their pay, and 14% say employees have expressed appreciation for transparent pay practices, according to Payscale’s findings.
What employees learn from pay transparency is also telling: compensation matters. The same rate — 14% of organizations — say they’ve had employees quit because workers saw job ads with higher pay elsewhere, and 11% have had employees see an internal posting for a similar role and realize they were being paid less, the findings showed.
“Transparent pay practices and meaningful raises are now table stakes to attract and retain top talent, but many organizations are falling behind as legislation is only accelerating,” Clarke said.
Another problem is that “half of employers don’t yet have a compensation strategy or pay communications in place, but employee engagement hinges on workers understanding the ‘what’ and ‘why’ behind their pay,” Clarke added.
For instance, only 51% of organizations train managers on how to have pay conversations with employees, which is still a first-time majority in 2024, Payscale said.
Similarly, while close to two-thirds (62%) of organizations already conduct or plan to conduct a pay equity analysis, 27% admit they don’t address severely underpaid employees unless the employee or their manager asks, the firm’s analysis showed.
Workplaces are strongly aware of pay equity issues, but HR departments may fall short on training and unity regarding this issue, Johnny Taylor Jr., president and CEO of the Society for Human Resource Management, noted in a recent SHRM report.
In particular, SHRM found that although 75% of organizations regularly audit for pay equity, disparities exist in how pay equity is evaluated. For example, HR professionals say women face pay discrimination at work, yet gender is accounted for in only 80% of pay equity audits.
Payscale’s findings on pay increases are consistent with other studies they may slow in 2024. For example, only 9% of companies responding to a Pearl Meyer survey expected higher salary increase percentage rates this year, compared to 40% last year, the firm reported in December.
One emerging philosophy is to consider paying workers who work on-site or in the office more than those who work at least part of the time remotely, while taking other factors into consideration, sources recently told HR Dive.
A possible approach might be to adjust pay for employees who move away from in-office work in a city with a higher cost of living to work remotely, the sources suggested. Employers may also consider stipends for employees who work in-office to help with costs related to commuting, food, transportation and caregiving, they said.