Companies See Perks as Way to Keep Pay in Check

"Faced with high inflation and high turnover, many companies are looking to offer perks such as more time off or permanent work-from-home options as a way to limit how much they have to boost employee salaries.

Once salaries go up, they rarely come down. Increasing pay too much too fast can leave finance chiefs with little room to maneuver if inflation abates or economic conditions deteriorate. So while companies are spending more on wages and benefits, many are resisting across-the-board salary increases.

A December survey conducted by advisory firm Gartner Inc. found that just over a third of all organizations said they plan to adjust compensation to account for inflation, with 13% saying they planned to do so for all employees.

Corporate spending on wages and benefits in 2021 accelerated at the fastest rate in two decades amid record resignations, according to the Labor Department. But for many employees, those adjustments haven't kept pace with the rising cost of living. Wages and salaries for job holders who have been in the same role for at least one year have been rising more slowly than inflation, increasing 5.9% in December compared with inflation of 7%, Gartner found when analyzing data from the Labor Department and payroll firm Automatic Data Processing Inc.

Chief financial officers weigh a range of factors when determining compensation budgets, including their ability to pass along higher salary costs to customers. Many companies over the past year have reported their highest profitability in years on the back of strong demand and price increases.

"I'd love to pay everybody as much as possible. But I also need to make sure the company remains competitive," said Chris Cage, CFO at government contractor Leidos Holdings Inc.

Employees at the Reston, Va., company said in internal surveys that flexible work arrangements are the priority.

Leidos last month said some employees could work from home on a permanent basis. The company also offered benefits such as access to a meditation app and financial counseling services.

The company plans to spend more on compensation this year than in 2021, including on merit-based increases for high performers, Mr. Cage said, but declined to say how much. He said Leidos is allocating "in the millions" toward new perks, benefits and training. Leidos earned $759 million in 2021, or 21% more than a year earlier.

Cosmetics company e.l.f. Beauty Inc. offered new perks such as meeting-free afternoons after 2 p.m. on Fridays, in part, so employees can have flexibility with their personal lives.

E.l.f. over the past year adjusted all salaries by a low-single-digit percentage to reflect the higher cost of living, CFO Mandy Fields said. It will decide in March how much to boost salaries for its next fiscal year, she said.

"Employee salary is one portion of it, but it is a much bigger picture than that," Ms. Fields said, referring to the company's compensation package, which includes equity grants for all employees. Profit rose 45% during the quarter ended Dec. 31, to $6.2 million." [1]

 

 Meditation helps to calm down when high prices at low wages are straining nerves.

 

1. Business News: Companies See Perks as Way to Keep Pay in Check
Broughton, Kristin. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 02 Mar 2022: B.5.