Dive Brief:

• U.S. employers continue to see pay increases as a talent attraction and retention tool, with average 2022 increases of 3% for executives, management, professional employees and support staff — up from 2.7% in 2021, according to a survey conducted between April and June by Willis Towers Watson.
• Respondents also said they plan to offer wage increases at an average of 2.8% to production and manual labor employees, which is similarly above this year's 2.5% average for the group. Employers in "high-tech" and pharmaceutical sectors had the largest projected increases, while those in either oil and gas or leisure and hospitality reported the lowest projected increases.
• Employers plan to reward "top performers" with "significantly larger" increases, continuing a trend, Willis Towers Watson said. Top performers in management and professional roles got an average increase of 4.5% in 2021, a mark 73% higher than the 2.6% average increase doled out to those with average ratings.

Dive Insight:

The survey results are a follow up to October 2020 research by Willis Towers Watson that showed more than one-third of U.S. employer respondents would reduce projected salary increases, though half of respondents said that planned increases for 2021 would remain intact. The firm pointed to financial concerns and budgetary constraints as a potential damper for planned increases.

After a year in which the pandemic disrupted salary increase plans for many employers, according to a Gallagher survey published in November 2020, the situation may have shifted. Employers are now likely to cite lack of talent as a concern moving forward.

For example, talent shortages have caused those in the grocery industry to consider signing bonuses, increased referral bonuses and increased scheduling flexibility, Grocery Dive reported.

Employers are turning to additional benefits beyond raises, too. In recent months, some McDonald's franchisees have offered childcare and eldercare benefits on top of increased hourly pay and paid time off, Restaurant Dive reported. In May, Willis Towers Watson said voluntary benefits such as financial planning and tuition reimbursement had become a more important component of employers' talent strategies.