2022 Compensation Trends

No matter how fulfilling a job is, the money matters.

 TABLE OF CONTENTS

Introduction

Salary Deflation
Why Inflation Shouldn’t be the Measuring Stick for Wage Increases
When Salaries Don’t Rise, Dissatisfaction Does
Why Offering More Money Isn’t (Always) the Answer
Put the Data into Action

Salary Transparency
Prepping for Compensation Conversations
Who Should Take the Lead in Salary Reviews?
What Does it Take to Boost a Salary?
Put the Data into Action

Total Compensation
Work-Life Balance is Key for Many Employees
What Opportunities are There to Increase Pay?
What Benefits Matter Most?
Put the Data into Action

2022 Compensation Trends

 With near double-digit inflation in the U.S. economy, a rise in flexible work,
and resignations at historic highs, employees are wondering if their compensation is matching what
they’re really worth. Meanwhile, employers are scrambling to hire and retain top talent as budgets
tighten in the face of economic uncertainty.

To help HR form a plan to improve employee engagement and retention, we surveyed 1,000 full-
time, salaried employees in the U.S. on how they feel about their compensation and what they
want from employers. We’ve discovered key 2022 compensation trends surrounding:

SALARY SALARY TOTAL

DEFLATION TRANSPARENCY COMPENSATION

What are business and HR leaders supposed to do about all this? We’ve analyzed the data and
included key takeaways for each trend.

2022 Compensation Trends 1

 Salary Deflation
In June 2022, inflation in the United States rose to 9.1 percent, its highest level in over
four decades. And with inflation so high, this can lead to salary deflation—meaning
employee compensation isn’t keeping up with inflation.

In fact, more than 1 in 3 (36%) salaried workers haven’t received a salary increase during
the past 12 months.

Across gender lines, the imbalance becomes even starker: fewer women are receiving
raises, and those who do are getting smaller raises than their male colleagues.

The WorldatWork Salary Budget

Men Women Men Women Survey 2021–2022 found that companies
66% 62% 6.39% 5.24% only projected a 3.3 percent increase in
salary budget, which doesn’t come close
SA L A RY I N CR E A S E S W ITH I N AV E R AG E I N C R E A S E
TH E PA S T 1 2 M O NTH S to matching the pace of inflation.

Salary increases within the Average reported salary increase of

past 12 months: those who received a salary increase
in the past 12 months:
Men 66%
Men average 6.39%
Women 62%
Women average 5.24%

2022 Compensation Trends 2

 Why Inflation Shouldn’t be the Measuring Stick for Wage Increases

The good news is, wages are steadily increasing. But the flip side is, so is the cost of living—at a
much faster rate.

40%

35%
Inflation Rates
30%
Median Wage Increase
25%

20%

15%

10%

5%

2008 2010 2012 2014 2016 2018 2020

(Source: Social Security Administration and US Inflation Calculator)

Employees see inflation going up, but they don’t see their paychecks covering the increase at the
gas pump or the grocery store checkout. And while wages can’t realistically track with a volatile
economy, that’s a hard thing to explain to someone who’s struggling to pay for rising energy, home,
and food costs.

And then there’s the perennial issue of people not being good at judging their own worth in terms
of market value. According to a 2021 survey from Payscale, a majority of workers (51 percent)
who are paid at or above market believe they are paid below market. HR is tasked with correcting
this misperception in a way that doesn’t dismiss the reality that many employees are feeling
undervalued and unhappy.

2022 Compensation Trends 3

 When Salaries Don’t Rise, Dissatisfaction Does

We’re living in exceptionally precarious times and even Nearly a quarter (23%) of
the perception of being underpaid is enough to have a employees describe negative
significant impact on mental health. emotions regarding their
financial compensation at work.
Over one-third of employees say their
13% feel frustrated
compensation is directly associated with
9% unhappy
their mental health.
7% feel resentful

Mental health affects every other pillar of employee wellbeing, and when people
Younger workers are also far more likely to feel the
aren’t feeling their best, they can’t show up to do their best work. In short, when
negative effects of compensation dissatisfaction.
mental health suffers, so does engagement, performance, and ultimately your
company culture, which makes our next finding especially concerning for HR.
Percent who say compensation
Echoing our previous findings about women getting fewer and smaller raises, women is directly associated with
are unsurprisingly feeling more frustration than men. mental health:

16% of women feel frustrated about their current financial compensation from their Millennials 54%
primary job, compared to 11% of men.
Gen Z 44%

Gen X 27%

Boomers 19%

2022 Compensation Trends 4

 Why Offering More Money Isn’t (Always) the Answer

Retention and salary satisfaction are closely linked. In our 2022 Guide to Retention,
we found that “better compensation” was among the top five reasons employees leave
their companies.
75% of employees
A salary increase is an incredibly tempting offer for most workers, especially would consider leaving
considering the dramatic rise in cost of living. their current job for a
But how much of a salary increase does it actually take for them to pack up their desk? salary increase.

Among those who said they would consider leaving their job for a salary increase, it
would take, on average, a 16.1% increase for them to consider leaving their current job.

And for employees who do decide to jump ship to a new company, their odds of getting
that salary increase are pretty high. 51% of employees
say they’d stay with a
Over half (53%) of employees who’ve moved to a new company in the last two years
received a salary bump in doing so with an average increase of 27.4%. company or job they
dislike if the salary is high.
The fear of losing employees may have
you scouring your budget for funds to 44% of employees say they’d like
pay employees more. But overpaying to
to change jobs but their salary is
attract and keep top talent is risky. Doing
so risks attracting mercenaries, not to secure, so they’re staying put.
mention putting golden handcuffs on
people who’d rather be elsewhere.

As important as it is to ensure fair

compensation, you need to invest in
employee engagement with a crystal
clear focus on your mission, vision, and
values if you want to improve your
culture and meet your growth goals.

2022 Compensation Trends 5

 Put the Data into Action

COMMUNICATE YOUR COMPANY’S COMPENSATION STRATEGY

If you’re paying your employees fairly but they still believe they’re being underpaid, there’s
a gap in communication—and in order to close it, you need to have a solid compensation
strategy for your company (start here if you’re creating or revamping yours) and a
plan for clearly communicating that strategy with your employees. And as we step into even
more economic uncertainty, a solid compensation strategy will help your company weather
potential storms and give employees a sense of security.

EMPHASIZE TOTAL COMPENSATION

An effective compensation strategy includes total compensation—a figure that
combines salary or wages with indirect forms of compensation like paid time off, health
insurance, bonuses, and any other benefits you offer. It’s up to you to help them see and take
advantage of everything you offer and experience just how much you value them.

FOCUS ON IMPROVING THE FULL PACKAGE

As you create a retention strategy, look at the whole picture: how you can improve company
culture, help employees feel connected to your mission, and pay them appropriately. If you
can create that balance, you can retain and reward the top performers that you want
sticking around.

2022 Compensation Trends 6

 Salary Transparency
Salary transparency is a sizzling hot, buzzword, but what does it
actually mean?
1. What 2. How 3. Where
1. What
Your company tells
employees what to expect on
their paycheck.
2. How
Your company shares how
they use market data to
determine pay.
3. Where
Your company has a
compensation plan and
shares pay ranges with
individual employees.
2022 Compensation Trends
4. Why 5. All
4. Why
Your company shares their
compensation plan with
employees to explain why
you pay what you do.
5. All
All employee pay information
and ranges are available to
employees.
The tricky thing about salary transparency
is that it’s a sliding scale. Employees say
they value it, which they do, but that doesn’t
mean everyone is on the same page.
60% of employees say that when
they’re job searching, they rule out
employers who aren’t transparent
about salary.
Salary transparency can mean anything from publically publishing
everyone’s salary to sharing pay ranges for job openings, which are on
opposite ends of the transparency spectrum.
But whatever salary transparency means to you, your employees, or your
competitors, it is something employees are starting to notice and seek out.
As employees are becoming increasingly interested in some level of salary
transparency both before and after being hired, this is also something
that will affect compensation conversations with current employees.
7
 Prepping for Compensation Conversations

75% of salaried employees prepare for compensation discussions with their employer. To
better prepare HR and managers for these compensation conversations, it’s helpful to know
what employees have on their mind when they walk into these discussions.

How do employees prepare for compensation conversations?

Researching similar roles online (32%)

Basing their desired compensation on past job history (30%)

Asking other people in their industry about their

compensation (28%)

Since many employees are showing up prepared, you and your managers need to show up
prepared, too.

Here’s what employees are bringing to the table at compensation reviews.

96% of employees have methods they use to determine

their own value as an employee—top methods include: 62%
Personal skills they bring to an organization (62%)
55%
Personal knowledge they bring to an organization (55%)
53%
Performance review feedback (53%)

2022 Compensation Trends 8

 Those are important, but HR and managers should walk into these conversations prepared to
connect the value of employees’ contributions to your business, and with a clear understanding
of your company’s compensation strategy and a framework for evidence-driven discussions.

How does the employee support business needs?

How is the employee driving customer value?

Are the employee’s goals lining up with business strategy?

2022 Compensation Trends 9

 Who Should Take the Lead in Salary Reviews?

While some employees walk into a compensation conversation prepped and ready, others
don’t feel comfortable bringing up salary conversations at all, so you shouldn’t count on your
employees to close the communication gap.

Nearly a quarter (22%) of employees don’t

feel comfortable bringing up compensation 22%
outside of company-organized discussions.

But it is important to have conversations with your employees about their salary, so they
understand their total compensation. And how often should you have these conversations?

Salaried employees have compensation reviews, on average, every 8 months and 16 days— with
over a third (38%) saying they have compensation reviews annually.

Anita Grantham, Head of HR at BambooHR, advises getting on a cycle “where compensation

conversations happen once or twice a year.” She also advises that leaders “be first to the
conversation about compensation.” But this contrasts with what almost half of employees think.

47% of workers say employees should

47% always be the ones to initiate compensation
discussions with their employer.

2022 Compensation Trends 10

 What Does It Take to Boost a Salary?

While many employees’ salaries have remained stagnant during four decades of high inflation,
some have been steadily boosting their salary. Those who netted an above-average increase—
whether through negotiation or changing jobs—have a few key things in common.

91 percent of above-average salary boosters prepare for compensation discussions.

They say talking with their manager and researching similar roles online were the most
impactful preparations.

Of above-average salary boosters who prepared, they said the

most impactful preparations were: 53%
Talking with a mentor, career coach, or direct manager (53%) 53%
Researching similar roles online (53%)
51%
Asking other people in their industry about their
compensation (51%)
44%
Basing desired compensation on past job history (44%)
42%
Discussing compensation with coworkers (42%)

2022 Compensation Trends 11

 As you’re having these conversations, you and your managers must make
sure you’re staying within the bounds of your compensation philosophy and
looking beyond an employee’s negotiation skills to avoid creating pay inequity
across your organization. Are you giving an employee a raise because: Nearly all (91%) of above-
average salary boosters say
They strong-armed you into it?
they were at least somewhat
They’re better at negotiating than other employees but not necessarily satisfied with their most
more skilled? recent salary increase.
Or because:

They’ve proven it’s reasonable?

They’re a highly engaged employee?

The raise fits within your compensation strategy?

Anita also advises that “compensation should be role-driven rather than

employee-driven. Comp the role first, not the human, because if you
compensate the human first, your compensation will never be objective.”
There can be many steps to creating a compensation strategy that helps
you compete for talent, but doing so will result in more equitable pay.

2022 Compensation Trends 12

 Put the Data into Action

DECIDE ON YOUR COMPANY’S LEVEL OF SALARY TRANSPARENCY

Your employees and candidates are most likely going to have questions about your
compensation practices and policies on salary transparency. Since there is such a wide
spectrum of salary transparency, you need to decide what that’s going to look like at
your organization and clearly communicate it with your employees (and decide how
much you’ll share with candidates, too).

TRAIN YOUR MANAGERS

Your managers are your front line of communication. When employees have questions
about their compensation, they will most likely bring them up with managers. Your
managers need to have a clear understanding of your company’s compensation strategy
in order to become effective ambassadors of the value you’re offering your employees.

2022 Compensation Trends 13

 Total Compensation
Salary is clearly incredibly important to employees, but as we’ve touched on earlier with total
compensation, salary isn’t the whole picture. Benefits are also a huge priority for employees.

30% 30% of employees have left a job solely due

to the benefits package.

Some employees would even be willing to take a salary cut for certain benefits.

41% of employees would be willing to take a salary cut for health

insurance benefits, with 7.8% being the average among those willing. 41%
38% of employees would be willing to take a salary cut for paid time
off benefits, with 7.6% being the average among those willing.
38%
37% of employees would be willing to take a salary cut for flexible 37%
work locations and/or hours, at 7.6% cut on average of those willing.

Given these stats, it’s no surprise

that employees say the most
important things when looking at Company offered perks Work-life balance Overall company financial
potential employers are: and benefits (82%) (79%) performance (62%)

2022 Compensation Trends 14

 Work-Life Balance is Key for Many Employees.

Salaried workers in the U.S. say flexible work hours and location are nearly
as important when considering a job offer as dental and vision benefits.

While not every industry can offer remote work or flexible working
hours, every business can consider ways to help employees prioritize
their home lives in addition to their work lives.

What Opportunities are There to Increase Pay?

Benefits aren’t the only piece of total compensation. For those employees who aren’t happy
with their salary, what are other opportunities for them to raise their pay beyond salary and
are they aware of them?

73% of workers say their employer offers additional ways to increase their annual earnings:

47% cite the potential for an end-of-year bonus

27% say appreciation gift cards

23% say profit sharing

22% say spot bonus

62% of employees say they’d
16% say equity
rather have a higher salary than
But don’t get too caught up in extra compensation here and there—when it comes down to
equity, bonuses, or profit sharing.
it, most employees just want a higher salary.

2022 Compensation Trends 15

 What Benefits Matter Most?

A significant number of employees reported that they would leave their current employer for a salary
increase, but what entices employees to leave when the salary at a new job is roughly the same?

“Regular, annual raises and bonuses. My “Quality health insurance paid

current position expects employees to be completely by the company, a dollar for
available 24/7 without any compensation. So dollar match for 401(k) contributions,
if I have to come in on a weekend, or travel for and 4 days of 10-hours work week.”
business, I often do not receive compensation
or reimbursement for things like gas.”

And a lot of employees even believe they deserve a pay increase if you aren’t offering certain benefits.

71% of employees say that working extra hours

warrants an increase in compensation. 71%
Nearly half (45%) of employees say that employers
not providing essential benefits warrants an increase
45%
in compensation.
32%
Nearly one-third (32%) of employees say that
requirements to be in the office warrants an
increase in compensation.

2022 Compensation Trends 16

 Put the Data into Action

RETHINK YOUR BENEFITS OFFERINGS

Have you recently reviewed your benefits package to make sure it’s keeping up with
the times? Do you review benefits with employees to make sure they know what you
offer? You can also gather feedback from your employees to make sure you’re offering
what they’re looking for, so you can provide the total salary, benefits, and perks package
that will keep them happy.

MAKE BENEFITS DISCUSSIONS PART OF THE HIRING PROCESS

More than one-third of employees say they didn’t know anything about their
current company’s benefits until onboarding.

25% of employees would never have taken their current job if they knew what the
benefits package was.

While benefits may not be negotiable the same way salary is, they’re a major piece of
your employees’ total compensation. Make sure your recruiters and hiring managers are
aware of the benefits you offer and that they are communicating what those benefits
are, whether the candidate is comfortable asking or not. You don’t want to disappoint an
employee on day one when they find out you don’t offer a benefit they were counting on.

Extraordinary employee experiences start with day one and continue throughout
the employee lifecycle, and compensation plays a major role. As you refine your
compensation plan and pay attention to how employees are feeling and the feedback
they give, you’ll be able to better retain employees and improve employee engagement.

Methodology:
BambooHR conducted this research using an online survey prepared by Method Research and distributed by Cint among n=1,000 adults (age
18+) in the United States who are full-time salaried employees. The sample was equally split between gender, with a spread of age groups and
geographies represented, and readable race groups. Data was collected from June 21 to June 28, 2022.

2022 Compensation Trends 17

 Become the place
people want to join
and stay.
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every aspect of your employee experience.

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2022 Compensation Trends 18