March 20, 2024 09:00 ET | Source: Payscale

• Pay transparency is officially a best practice as the majority of organizations (60%) now publish salary ranges in job ads, up 15% over last year.
• More organizations are ditching degree requirements and embracing skills-based hiring strategies.
• Compensation is considered the biggest challenge facing organizations in 2024, ahead of recruiting, retention, and engagement.
  

SEATTLE, March 20, 2024 (GLOBE NEWSWIRE) -- Today, Payscale Inc., the leading provider of compensation data, software and services, released its flagship report, the 2024 Compensation Best Practices Report (CBPR). Now in its 15th year, data and insights from the company’s annual survey of compensation professionals and HR leaders are distilled into the largest report of its kind, revealing the latest workplace and compensation trends in the wake of high inflation, pay transparency legislation, and slowed economic growth.

“This year’s report tells us that while the economy may be in flux, employee expectations have not swayed. Transparent pay practices and meaningful raises are now table stakes to attract and retain top talent, but many organizations are falling behind as legislation is only accelerating,” said Payscale’s Chief People Officer Lexi Clarke. “Half of employers don’t yet have a compensation strategy or pay communications in place, but employee engagement hinges on workers understanding the ‘what’ and ‘why’ behind their pay.”

Key takeaways from CBPR include:

Pay Increases and the Job Market: Competitive raises that exceed inflation are a priority, even in a sluggish economy — but fewer organizations are planning to hand them out.

• Organizations predict an average base pay increase of 4.5% in 2024, compared to the average of 4.8% actually given last year. This increases to as high as 6% for some industries.
• This year, only 79% of organizations plan to give pay increases, which is a drop from 86% in 2023, and the lowest it has been in years. However, 14% are unsure, which means this could end up looking similar to last year.
• Reported voluntary turnover is 21% in 2023, down 4% from 2022 (25%) and much lower than 2021 (36%) — evidence that it’s an employer’s market, at least temporarily.
  

Pay Transparency and Fair Pay: Posting pay ranges in job ads is now the norm, prompting underpaid employees to resign — yet some employers are still gambling with unaddressed pay inequities.

• The majority of organizations (60%) are publishing pay ranges in job postings in 2024, compared to 45% in 2023. However, there has also been a slight uptick in organizations resisting pay transparency (from 11% to 13%).
• In response to pay transparency, 27% of organizations say employees are asking more questions about their pay, 14% have had employees quit because they saw job ads with higher pay elsewhere, and 11% have had employees see an internal job posting for a similar role and realize they were being paid less. More encouragingly, 14% say that employees have expressed appreciation for transparent pay practices.
• Pay equity analysis is a planned or current initiative for 62% of organizations — but over a quarter (27%) admit they do not address severely underpaid employees unless the employee or their manager asks.
  

Compensation Strategy and Pay Communications: While progress has been made, almost half of organizations need to get serious about strategic compensation management.

• HR leaders rank compensation as their biggest challenge this year (50%), over recruiting (44%), retention (42%), and engagement (37%).
• While only 53% of organizations have a formal compensation strategy in place, 21% are planning to build a compensation strategy for the first time in 2024.
• Only half of organizations (51%) train managers on how to have pay conversations with employees, which is still a first-time majority in 2024.
  

AI Adoption: Although forms of artificial intelligence (AI) have been used reliably for years in compensation, organizations are approaching the technology with caution.

• Almost half of HR leaders and compensation professionals (49%) are optimistic about AI; most (63%) believe that AI will reduce unfulfilling work. Meanwhile, 17% are pessimistic; their top concern (56%) is that AI will extend bias rather than mitigate it.
• The practical application of using AI for compensation decisions is viewed more cautiously by organizations, with only 7% of respondents being totally on board and 50% undecided.
• Currently, 21% of organizations are using or developing AI for managing or generating job descriptions, 18% to parse resumes and identify candidates, and 17% to create or support learning and development or standard HR documents.
  

Remote Work and Skills-based Pay: Modern approaches to work, like valuing skills over degrees or productivity over office mandates, are paying off for forward-thinking companies.

• One in three organizations (34%) have removed degree requirements for salaried positions. Overall, only a minority (22%) still require a college degree for all salaried positions in 2024.
• The majority of organizations (58%) compensate for competitive skills.
• While only 11% of employers offer a fully remote work environment (unchanged from last year), the voluntary turnover rate for remote companies is 13%, compared to 30% for traditional in-person work, 23% for work environments split by job type, and 16% for hybrid.
  

Labor Unions and the Minimum Wage: Worker rights will continue to be a major focus in 2024, as employees continue to organize and pay floors increase in almost half of states.

• HR leaders view unions significantly more positively (62%) compared to executives (38%).
• Almost a quarter (22%) of employers bargain with a union, with 18% having done so for many years and 4% just in the last few years. While not a large number, the 4% includes organizations of all sizes and industries.
• Minimum wage increases will impact compensation strategy for 27% of organizations.
• Almost three-quarters (73%) of employers are in favor of raising the federal minimum wage.

“Fair pay is the bedrock of compensation strategy, yet alarmingly, more than a quarter of employers are not proactive about correcting pay disparities,” said Ruth Thomas, pay equity strategist at Payscale. “We’re seeing forward-thinking companies, on the other hand, make adjustments for external and internal pay equity, pay compression, and competitive skills — while diversifying their workforce by removing barriers to entry like degree requirements.”

Payscale’s 2024 Compensation Best Practices Report analyzes survey data from 5,735 respondents gathered between October 2023 and December 2023. Nearly 100 pages long, the report includes cuts of the data across organization size, performance, industry, and location. The full report and its methodology can be accessed in its entirety at Payscale.com/research-and-insights/CBPR.

About Payscale
As the industry leader in compensation management, Payscale is on a mission to help job seekers, employees, and businesses get pay right and to make sustainable fair pay a reality. Empowering more than 50% of the Fortune 500 in 198 countries, Payscale provides a combination of diverse and dynamic data sources, experienced compensation services, and scalable software to enable organizations such as Angel City Football Club, Target, Gainsight, and eBay to make fair and appropriate pay decisions.

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Source: GlobeNewswire

https://www.globenewswire.com/news-release/2024/03/20/2849394/0/en/Worker-Expectations-Clash-with-Economic-Realities-Payscale-s-2024-Compensation-Best-Practices-Report-Reveals.html