NEW YORK–With an employment market evolving in what one HR leader described as “real time,” credit unions may need to consider a new approach being taken by some companies–moving to more frequent employee reviews beyond the traditional annual review.
The evolution is taking place as employers added 6.7 million jobs last year, yet U.S. job openings and worker turnover are hovering near their highest levels on record. Wages climbed 5.7% in January from a year earlier, government data show, nearly double the average gain before the pandemic hit, noted the Wall Street Journal.
While full off-cycle salary reviews remain relatively rare, surveys show, and executives say companies can turn to other options, such as using one-time bonuses, expanding benefits or adding vacation days, to help retain workers without boosting wages, according to the Journal.
The Journal cited a January survey by the consulting firm Mercer that found roughly half of respondents said they didn’t plan additional reviews or salary increases to address inflation this year, though nearly a quarter said they were considering it. Around 20% of respondents said they plan to review off-cycle salary increases as needed in 2022, the Journal report added.
‘Persistent Decisions’
Only around 6% of the 2,565 human-resources managers who responded said they had decided to review compensation two or more times this year in response to rising prices.
“These tend to be persistent decisions” as employees get used to a new cadence of salary reviews and expect them to continue,” Tauseef Rahman, a partner in Mercer’s career business, told the Journal. Once companies put in place a new process, “it’s difficult to scale it back, so I suspect organizations are cautious.”
According to the Journal, at one company, CoorsTek, higher pay for new employees shrank the difference between pay for tenured workers and their newer counterparts, so the company now does a quarterly “compression” review. It wants to ensure that the experience of existing employees, who may have been hired in a less-competitive job market, is rewarded appropriately, the Journal said.
As a result, compensation expenses for the company’s critical roles rose about 10% last year, and CoorsTek expects a similar increase this year. It is budgeting several extra million dollars for pay increases on top of its usual 3% salary budget increase, the report statetd.
Biannual Reviews
Another firm, TigerGraph Inc., an artificial intelligence startup with about 350 employees, also moved to biannual pay reviews last year.
“It wasn’t a decision we took lightly,” Todd Blaschka, chief operating officer, told the Journal. “Just because there’s a review doesn’t mean there’s a guaranteed change in your compensation. So, we have to manage expectations” for employees.
The Journal reported salaries at the Silicon Valley firm, which nearly tripled its head count in 2021, have risen around 12% overall in the past 12 months. The additional market data the company collects during its hiring helps set baselines for the biannual reviews, the report explained.
“We now learn where the market is going much more quickly,” Blaschka said, “and we can start predicting where things are going based on the data we’re gathering.”