Managing the impact of inflation: the results are in
A global pandemic… the Great Resignation… and now the Cost of Living Crisis. Business leaders are navigating huge challenges in the current economy. “As employee voices on compensation and cost of living rise to a roar, we asked more than 200 founders: what are you doing about this?”
Our latest survey consulted more than 200 business founders and People leaders from all over the world. We asked whether they’ve adjusted salaries in line with inflation and, if so, then how much. We asked if they’re making one-off payments or running other initiatives. Then we analysed the results to find out what’s happening in the US compared with Europe. Here’s what we found out.
A “wait and see” approach
The current economic climate feels chaotic. Some companies are scaling up while others downsize… and many are hovering in uncertainty. We asked: Are you taking action on inflation yet?
20% said NO. 38% said YES; but 40% said they aren’t sure right now.
Why the wait? CEO of Figures Virgile Raingeard says: “Most company and People leaders haven’t seen anything like this before. People are holding off because they don’t know what to do, and they’re waiting to see how other companies will act.”
What about those who say they aren’t changing anything? They may simply be confident that their compensation structure already works. Like Whereby, Oyster has a salary model which accounts for market conditions as well as performance. Head of People Experience Kim Rohrer explains, “This way, we can stay programmatic, objective, and consistent, rather than being reactive and perhaps less able to sustain our growth.”
Our survey revealed an interesting difference in global decision-making: in the US, 75% of respondents are tackling inflation now – but in the UK that figure is at 59%. The size and maturity of company also matters, with more of the larger, established businesses appearing in our ‘yes’ column.
What action looks like
Right now, there are two main courses of action for leaders: increasing salaries or offering one-off bonuses. Of those opting to raise salaries, 40% are making an immediate increase and 32% said it will be a gradual incline. 9% of respondents are making single support payments.
At AREX Markets, Julio Hailo is concerned about retaining employees. “I'm currently arguing for an increase of our home office allowance, ideally with a lump sum that would be retroactive to the beginning of the year with the amount being adjusted if necessary every semester.”
If your budget won’t stretch to full-scale pay rises, you could consider an eligibility-based scheme or benefits package. In the new e-book, our experts outline a comprehensive approach to help you decide how your company should respond to inflation.
How much is enough?
Among those paying bonuses, we discovered that 57% will pay up to 3%, with 43% going up to 5% of annual salary. This could be a result of government incentives (with most EU countries running some kind of tax break for bonuses); it could also be a reactive measure while our businesses “wait and see”.
What are the average levels of salary increases? We asked our respondents how much they’ll raise salaries (and whether they’ll apply it across the board) – and you can read the results in our free e-book.
Download it now to read the survey results in full – as well as our experts’ recommendations to help companies of all sizes. There’s an actionable checklist that you won’t want to miss.