Impact of Inflation on salaries in Aged Care
There’s a perfect storm brewing for employers. High inflation has businesses wanting to tighten their belts. However, macroeconomic challenges, aggressive hiring and budgetary pressure is causing challenges for most businesses and putting pressure on them to increase salaries.
Our 2022 Human Capital Pulse Survey found 78% of employees left their employer because of a better career opportunity and 77% left for better pay*.
How can employers be sure they are offering salaries in the right range?
“There’s a couple of things causing tough times for employers right now,” explains Belinda Armenta, a partner in Aon’s human capital solutions practice. “When you couple this with the significant supply and demand pressures for talent, it means employers are finding more specialised roles becoming harder to fill and are needing to pay premiums both for key skills and securing talent.”
Preparing your compensation budget for inflationary times
So, the big conundrum for every employer as they start thinking about the remuneration review is, what is the right number? “Employees want to see a meaningful number that counters the cost-of-living crisis, but organisations need to be deliberate about their cost structures, so they’re being careful with their remuneration budgets,” says Belinda.
Market pricing is the process of determining the fair market value of a job against the defined market, annually or when required
“In complex times when considering how much to pay people, employers need to base decisions on very robust data.”
Consideration needs to be taken, using data to determine the appropriate response, for example.
- Using a salary and total rewards data subscription service to compare your company’s salary structure with relevant peers to determine your position against the market
- Thinking about pay decisions and other reward factors, including career progression, combined jobs, jap determination and cost impact and new salary implementation
- Salary structures that are considerate of budget and pay transparency.
The trouble for some businesses, however, is a lack of data, which makes it almost impossible to make informed decisions.
Our databases comprehensively cover the full range of remuneration elements in an employee’s package and are regularly used by companies to ensure they pay their employees market competitive rates. As well as receiving our reports, employers can use the data and online tools provided to learn what similar jobs are paying, so they can be more competitive by understanding their market position.
How can businesses communicate salary messaging to employees when addressing inflation?
In challenging times, the goal of singular measures like salary increases should be to achieve fairness and reasonableness in pay for key contributors versus the impossible goal of universally satisfying all employees with pay increases during challenging times.
The preferred approach is usually to deliver a consistent and fair message to employees. Managers should reiterate to employees how pay increases connect to the firm’s compensation philosophy and that salaries reflect different roles. Employers can also review and leverage their investment in employee benefits to drive employee engagement and retention.
Want to learn more about how data can assist in salary remuneration strategies?
Explore Aon’s Community, Advocacy and Social Services Remuneration Report or contact us for more information.
*Aon’s Human Capital Pulse Survey, January 2022
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