Salary Range Inflation and Increased Pay Transparency

This blog was brought you as a part of a new series of blogs, “The Comp Corner,” in which one of our expert consultants will answer specific questions submitted by HR professionals like you!  

Instead of trying to anticipate the challenges you're facing at work, we’re going straight to the source – and we're looking forward to fielding some of your toughest questions about pay. Click the button below to submit yours, or shoot us your question by email with subject line "Comp Corner." 

Important note: if you don't want to miss an update to our Comp Corner, make sure you're signed up to receive our Compensation Newsletter. 

Q: Employees feel their salary is losing value. What is the impact of inflation on salary ranges. What was the average salary range adjustment for 2023? 

A: Inflation can have an impact on employee compensation because the purchasing power of your employees decreases as inflation rises, making an employee’s salary less “valuable.” According to recent reports, the Consumer Price Index rose by 3.4% in 2023. Some companies choose to provide a COLA (cost of living adjustment) to their employees every year in addition to their annual raise. Employers can provide the entire CPI percentage increase, or they could choose to provide a percentage of the CPI, such as half (1.7%) For employers that cannot afford to do both at the same time, consider providing mid-year adjustments.

Q: Our company will soon be required to provide a salary range on our job postings. What is the best way to start preparing for this increased pay transparency? 

A: To prepare for increased pay transparency, it is critical to understand your compensation philosophy and what impacts decisions regarding pay. In our experience, increased pay disclosure can lead to more questions from both applicants and employees, who will want to understand where they fall within the pay range and why. If your company does not currently have set salary ranges, then the company may want to start by creating a compensation structure. Once created, it’s important to ensure that everyone is within their assigned grade and adjust those who are not. It’s also important to consider conducting a pay equity analysis to proactively identify and rectify any pay inequities.