It’s a complicated time for HR professionals when it comes to employee compensation and retention strategies. On the one hand, the labor market remains tight, despite some high-profile tech layoffs, and inflation is contributing to expectations for record salary increases heading into 2023. On the other hand, lingering recession fears have caused many employers to worry about the ability to commit to greater pay increases as they look ahead to an uncertain economic climate.
Employers will need to carefully thread the compensation strategy needle if they hope to both mitigate their exposure to a sudden economic downturn and simultaneously protect their valuable talent pool from competing employers.
Sheri Atwood, CEO and Founder of SupportPay, a co-parenting solution that manages alimony, child support payments and expenses shared some of her insights and predictions for employee benefits trends in 2023.
- Comprehensive benefits packages will continue despite the economic downturn. Atwood says the war for talent will continue to drive benefit enhancements, and points to a recent survey from Mercer indicating that 70% of all large employers are planning benefit enhancements for 2023. We’re already seeing massive layoffs in the technology sector, she says. “HR decision-makers will need to lean on competitive benefits packages that focus on prioritizing health, wellness, and employee outcomes in order to keep top talent.”
- Financial well-being will be an area of concern. “Research has shown that financial well-being is tied to retention, productivity, and an employee’s overall mental and physical well-being,” Atwood says. In a tight economy and economic uncertainty, financial wellbeing will be an area of focus in 2023 for many companies.
- Companies will focus on benefits for each life stage. Employee needs differ based on where they’re at in life. During the pandemic these differences became clear with many struggling to tackle the demands of working from home while caring for children and others. Family-friendly benefits like paid family leave, childcare, family building, and elderly care assistance, will remain popular Atwood says. In addition, she says, “we’ll see companies continuing to implement holistic benefits that address each life stage and add more features to their benefit programs that meet employees where they are.”
- Affordability will be top of mind. The availability of new benefit options, Atwood says, give employers the opportunity to reduce costs while enhancing the benefit options they’re able to provide employees.
If each new year simply brought a repeat of the trends and challenges of the previous year, business leaders would face a far easier task in planning for the future. Obviously, the real world is more dynamic and unpredictable, and that is particularly true of the HR landscape heading into 2023, with a challenging task ahead for those responsible for compensation and benefit strategy.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.