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Base Pay Rates Projected to Increase in 2022

Base Pay Rates Projected to Increase in 2022

The COVID-19 pandemic has led to a lot of devastating outcomes, and the workforce is no exception. From offices being rattled by work from home mandates to a shortage of workers leading to an extremely competitive job market, the workforce looks radically different than it did almost two years ago. 

Studies have shown that 1 in 4 workers quit their jobs this year. The result? Inflation and a competitive job market with an amplified emphasis on employee retention. Employers should expect to see a demand for bigger pay raises in this new year, which can cause a lot of added stress and uncertainty when it comes to budgets and employee retention. Here is how you can prepare for what lies ahead.


What is Causing This?

According to the Conference Board, employers are anticipating the largest one-year projection hikes for base salaries since 2008. Organizations should expect to see base pay rates—which do not include bonuses and one-time pay outs—to go up an average of 3.9%. This percentage prediction has grown over the course of 2021, with an original prediction of a 3% increase. Employers are using higher wages to attract top talent, thanks to inflation and labor shortage.

The good news is there are a few ways you can get ahead of this trend before the new year begins.


How to Adjust Your Compensation Practices

It’s always beneficial to review your current company compensation policies. When writing compensation policies, it’s better to over explain than under explain, which leaves room for confusion. Here are some things to consider when writing your company compensation policy:

  • How is base pay determined?
  • If there are pay ranges for roles, what are they?
  • What skills and experience are required for a raise?
  • Do you offer bonuses? If so, how are they earned?
  • Will your company counter another job offer? If so, who does an employee approach about this?


When it comes to writing any company policy—particularly a compensation policy—there are a lot of things your leadership team needs to agree on. Once you have a policy your team stands behind, be sure to communicate it and make it easily accessible to employees for later reference.

When it comes to handling pay raises, be sure to remain compliant. If you do offer an employee a raise, be sure to let them know when they can expect it to be implemented and ensure your payroll reflects that. In BerniePortal, you can easily adjust an employee’s compensation with just a few clicks:



If you decide to offer a pay raise company-wide, you can use our Mass Update feature to make changes to every employee’s salary.



BerniePortal also allows managers to view employee’s compensation history to keep track of growth.



Chances are your company will be looking to hire in the new year—or at least wants to avoid employee turnover. When it comes to posting job openings, we find it helpful to list out the salary in the description, which will ensure that the applicant and hiring manager are on the same page from the outset. It also eliminates any surprises near the end of the interview process, avoiding wasted time. 

BerniePortal’s Applicant Tracking Feature streamlines the hiring process from creating the job posting to widening the applicant pool with our Indeed integration to saving templates for quick employee messaging. When it comes to recruitment and retention, it’s always wise to stay up to date on industry salary standards.



How to Talk About Raises with Employees

Having an employee approach you about a pay raise, counter offer, or pay compression can be a tough conversation. Nonetheless, the way you approach these conversations can be crucial to employee retention. Here a few things to do when you have a team member approach you:

  • Refer to Company Policy: Before you engage in an important conversation with a team member, it’s important to refresh your understanding of company policies. At BerniePortal, we have found it helpful to have a manager manual that equips managers with the tools needed to best lead their team. We use a “levels” document to calculate target compensation and each team has its own document included in our Culture Guide. Compensation is based on years of experience and a combined score of job scope and skill.
  • Review Past Performance: When approaching compensation raises, it’s important to look back on past performance. Using BerniePortal’s Performance Management Feature, we find it helpful to refer back to past 1:1 agendas and summaries to see any record of exceptional or subpar performance that was brought to the surface. You can ask the employee to come prepared to talk about why they deserve a raise and some of their recent contributions to the company.
  • Schedule 1:1 meeting time: It’s important to give undivided attention to an employee when discussing personal matters such as a pay raise. A great way to do this is to schedule 1:1 meeting time and add it into the agenda so the employee and manager have ample time to prepare themselves. 

As companies prepare for 2022, it’s fair to say that compensation conversations may become more frequent than normal. Preparing for these conversations will allow both parties to feel heard and, hopefully, come to a fair decision.


What If You Can’t Offer a Pay Raise? 

If your company is on a tight budget going into the new year, raises may not be realistic. Here are some other ways to compete in today’s competitive market:

  • Offer work-from-home flexibility: If your company is back in office, it may be wise to offer work-from-home flexibility to your employees if it makes sense for your organization and the role. Whether it’s remote or a hybrid work model, many job seekers are looking for companies who offer that flexibility.
  • Offer extra PTO days: If your company isn’t able to increase an employee’s base salary, it may be beneficial to add extra PTO days to benefits packages. At BerniePortal, we currently offer our exempt employees unlimited PTO days and have found this to help recruitment efforts.
  • Revisit your benefit offers: Starting a new year is a great time to revisit the benefit packages you offer employees. Your company may find an opportunity to offer more appealing benefits like an HSA contribution or maternal/paternal paid leave. Upping your benefit packages could be leverage to retain employees if budgets won’t allow for big pay raises in 2022.
  • Engage employees: Recent studies have shown that high employee turnover rates are not an industry or compensation issue, but rather stem from disengagement in the workplace. One way to compete in the current job market is to engage employees and make them feel inspired by the work they do. An understanding manager and a passion for their work can go a long way when the budget doesn’t allow for a raise.

New Year, New Opportunities

There is no doubt that entering a new year can feel very overwhelming for any team. The COVID-19 pandemic has brought on a lot of new challenges and continues to do so as we enter 2022. Now is a better time than ever to prepare, and BerniePortal is here to help you streamline the process. Schedule a demo to see how our comprehensive features can help you navigate pay raise hikes and more.


Additional Resources

You can stay informed, educated, and up-to-date with important HR topics using BerniePortal’s comprehensive resources:

  • BerniePortal Blog—a one-stop-shop for HR industry news
  • HR Glossary—featuring the most common HR terms, acronyms, and compliance
  • HR Guides—essential pillars, covering an extensive list of comprehensive HR topics
  • BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
  • HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics

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