A look at remuneration trends in 2023

What’s top of mind for HR these days?

Wage pressure and the search for skills will continue to be challenges throughout 2023, according to Cathy Hendry, Managing Director of Strategic Pay.

In delivering the keynote speech at the HRD National HR Summit held at the Hilton in Auckland on April 27, she said, “It’s not a surprise to see remuneration right up there” when it comes to priorities.

Remuneration is “not necessarily going to help you keep staff if you don’t have the other things sorted but you do need to make sure it’s correct in the first instance,” she said.

Remuneration landscape

Results from an ELMO Industry Benchmark Report and Strategic Pay’s PULSE Survey found that organisations across all sectors are planning remuneration increases of a median 5%, . Somethinga trend the data hasn’t appeared for a long time, Hendry said.

Businesses are taking a proactive approach to forecasting. One-third (36%) of organisations surveyed say they had reviewed their forecast since it was originally set, and the majority had forecast up.

Remuneration increases are historically led by the private sector but the data revealed that the public and NFP sectors haven’t waited for that to happen this year.

Thirty per cent of the organisations surveyed said they will be basing remuneration on performance and 32% said they’re aligning to the market rate.

“What was really surprising for me, was that 28% are still just doing a flat across- the- board increase,” said Hendry. “Applying 5% or 7% across the board is not the most efficient use of your money.”

Instead, Hendry suggests a targeted approach and focus on retaining your key staff, but she added that remuneration is not just about improving retention, with other things to consider such as improving gender pay equality.

Plus, measures from organisations to retain talent include retention bonuses, balance and flexibility, overseas recruitment, and L&D and EVP initiatives.

HR biggest challenges

There was consensus  in the crowd when Hendry talked about the biggest challenges for HR. Unsurprisingly, recruitment topped the list, followed by upskilling and reskilling, hybrid work, and lack of resources.

“It may not be a surprise to HR professionals… despite the economic downturn we’re seeing, the New Zealand workforce is predicted to grow,” she said.

Enterprise organisations are the most optimistic about growth, and large organisations have been running with short staff for so long they can’t miss the opportunity to snap up people who have been made redundant, Hendry said.

Focus on wellbeing

Organisations are focused on ensuring their staff are taken care of with wellbeing initiatives showing the largest change, with flexibility and professional development right behind.

ELMO’s data delved deeper into the wellbeing perks: Mental health days and programs as well as access to wellbeing apps are all growing in popularity.

“There has been a lot of research into the cost of proactive wellbeing strategies compared to reactive, and as the saying goes, prevention is better than the cure,” Hendry said.

For the first time, ELMO asked about unlimited leave which is offered by almost 20% of the companies surveyed. The once popular company vehicle perk dropped to the bottom of the list;, Hendry cited the fact that fewer people are coming to the office.

Health and safety rated as a top priority amongst survey respondents.

“Currently within health and safety, people are more aware that it goes beyond workplace injuries, it feeds into mental wellbeing as well,” said Hendry.