While many Americans are worried about the high rate of inflation, companies are also worried, albeit for a different reason.
A study released on July 12 from the Society for Human Resource Management (SHRM) Research Institute found that almost 73% of HR professionals reported similar concerns among their organizations—with the highest concentration being found in the industries of agriculture (97%), wholesale trade (95%), utilities and energy (82%), and manufacturing (82%).
“Employers recognize that inflation has a major impact on the well-being of their team,” said Johnny C. Taylor, Jr., SHRM CEO in a statement. "In fact, SHRM research found that 87% of those worried about inflation said their highest concern was the effect on the lives of their employees. But there is no one-size-fits-all approach to how organizations are handling the situation. While some employers are re-examining their strategy when it comes to pay, many others are unsure or not currently considering inflation as a factor in their annual pay raises, instead focusing on pay transparency, competitive compensation as well as the overall employee experience.”
HR professionals reported their organizations’ plans for factoring in inflation when granting annual pay raises for 2022. Though the lives of their employees were cited as their greatest concern, more than half of the participants surveyed are either not considering inflation (26%) or are not sure if inflation will be factored into annual pay raises (2%).
Of those who were aware of their organizations’ plans for annual pay raises, 63 percent reported that inflation is being considered or accounted for in annual pay raises.
Other Key Findings
Concerns about inflation varied by organization size, with HR professionals in smaller organizations being more likely to be concerned:
- 81% of HR professionals in small organizations (less than 100 employees).
- 74% of HR professionals in medium organizations (100-499 employees).
- 67% of HR professionals in large organizations (500 or more employees).
Of those who indicated inflation was a concern at their organization, the highest concern was with how inflation would affect the lives of their employees:
- 87%: the lives of our employees.
- 70 %: customers and consumers.
- 61% suppliers and wholesale costs.
Small organizations were much more likely than large organizations to consider inflation for annual pay raises. Of the HR professionals who were aware of their companies’ plans and reported that inflation is being considered in annual pay raises or accounted for based on standard cost of living adjustments:
- 76% were from small organizations
- 65% were from medium organizations
- 54% were from large organizations