Compensation Insights, Trends,
and Data-driven Projections
The 2021 salary budget season is fast-approaching, ushering in
high-stakes decisions that will impact talent and compensation
strategies for businesses at a critical moment in the job market.
Economic recovery, mass resignations, and the rise of the
delta-variant are just some of the repercussions of 2020 that
place HR and compensation professionals in a difficult spot to
navigate talent strategies.
Despite these unprecedented challenges, the Salary Budget
Survey results reveal the agility and responsiveness of the
greater compensation community. Businesses expecting to
increase their salary budget have doubled since last year, while
the proportion of overall respondents opting to lower their
salary budget has dropped by over a factor of 5 since 2020.
These positive signs point to growing confidence in pandemic
recovery and indicate pivoting to concerns of a tight labor
market. Indeed, 50 percent of respondents reported that both
improved economic conditions and labor market concerns were
cause to increase salary budgets. This is a considerable
change from 2020, when just 22 percent of respondents
were concerned about competition for labor.
Likewise, 46 percent of businesses pointed to unusually low
2021 salary increases as the cause for expecting higher
increases in 2022. While this is a dip from 60 percent of
respondents who reported lower increases in 2020, it’s not quite
at 2019 levels (27%) – an indication that compensation practices
are still in pandemic recovery.
For businesses reducing salary budgets in 2022, it isn’t all bad
news. While concerns about future economic conditions or
business performance was the primary reason for 2022
reductions, this comprised 43 percent of respondents compared
to a substantial 92 percent in 2020. Additionally, 48 percent
reported that prior year (2021) increases were greater
than normal, compared to just 6.2 percent in 2020. While this
trend may be a result of business recovery in some cases,
others may have felt pressures to offer pay increases to retain
employees or reopen and couldn't hold off until 2022.
Human resource objectives now must balance attracting new
employees and retaining current ones, as tight labor market
conditions and rising inflationary pressures cause employees to
re-evaluate their current compensation packages.
2021–2022 PAYSCALE SALARY BUDGET SURVEY