A Changing Workforce Demands New Compensation Approaches
The compensation trends in the United States are evolving rapidly as companies navigate a complex labor market. As we move into 2023, organizations face a dual challenge: addressing inflationary pressures and retaining talent in a competitive hiring environment. Understanding these trends is essential for HR leaders aiming to align their strategies with employee expectations and business objectives.
In today’s market, employees aren’t just looking for a paycheck—they’re seeking a complete employee experience. With flexibility, well-being, and purpose at the forefront, organizations must think beyond traditional pay structures to stay competitive.
Employees Want More Than Just a Raise
Leadership teams are responding to these shifts by offering expanded benefits and more flexible work models. According to a CEO Benchmarking Report:
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37% of organizations now offer enhanced benefits.
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33% introduced flexible work arrangements.
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29% provide more frequent time off or role modifications.
This multi-pronged approach shows that there is no single solution to reducing turnover. Instead, companies must tailor strategies to address evolving employee expectations, especially around burnout, career growth, and work-life balance.
One critical insight: career change (41%), poor work-life balance (36%), and burnout (30%) are the top reasons for voluntary exits. These statistics are a wake-up call for HR leaders: keep up with the needs of your workforce or risk losing them.
Compensation Budgets Are Expanding — But Not Equally
The WorldatWork’s Salary Budget Survey reports that 2022 saw salary budgets reach a 20-year high in the U.S., with:
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Average increase: 4.1%
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Median increase: 3.8%
These figures are expected to hold steady into 2023. This is a clear indicator that employers are prioritizing competitive pay to attract and retain high-performing employees, especially those with specialized skills.
However, not all employees will benefit equally. Increases are often distributed based on performance, skill level, and market demand. High-demand roles and top performers tend to receive above-average raises, while early-career or underperforming employees may see smaller adjustments.
Stat to Know: 3 out of 5 companies are increasing their payroll budgets for 2023.
Building a Market-Competitive Employee Experience
A market-competitive pay structure is only one piece of the puzzle. The employee experience encompasses everything from onboarding to daily tasks, communication, development, and reward systems. Companies that treat this experience holistically are better positioned to retain talent.

Here’s how to begin:
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Survey your employees: Use focus groups or quick surveys to gather direct feedback on what matters most.
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Personalize where possible: Not all employees value the same perks—some want growth, others want flexibility.
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Review benefits through a retention lens: Look at which offerings align with performance and well-being.
It’s not just about what you pay, but how you support your workforce that determines success.
The Take-Away
It’s important to remember that the employee experience doesn’t happen in a vacuum – it happens within the context of the overall organizational culture. To truly create a great employee experience, companies need to focus on creating a positive and supportive culture where people feel valued and respected. This can be achieved through initiatives such as training managers on how to best support their team members, encouraging open communication channels between employees and management, and providing opportunities for employees to give feedback on their experiences.
Creating a great employee experience is essential for any organization that wants to attract and retain top talent. However, it’s important to remember that this isn’t something that can be achieved overnight – it requires careful planning and execution. By taking into account the needs of your workforce and aligning them with your talent strategy, you can create an employee experience that will set your company apart from the competition.
Further Steps
We know that your compensation strategy is key to success. That’s why we offer deep experience in base salary benchmarking, incentive program development, and total rewards for you or any other members within the organization who need help with their workforce planning needs! Check out our latest insights on compensation strategy or contact us for other helpful resources.