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Business

Pay raises? Only for the best performers, say CEOs

A new Gartner study shows that employee performance will be key in awarding pay raises.
sabrina-ortiz
Written by Sabrina Ortiz, Associate Editor on
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Image: PM Images/ Getty

Today, nearly everywhere you go, you are faced with rising prices. Despite the price of everything going up, one number remains constant: your salary. 

If you are trying to get that raise, think again. A Gartner study shows that 51% of organizations plan to raise wages only for top performers in the face of inflation. 

SEE: Inflation is about to change grocery shopping for good

The study polled 130 CEOs and CFOs, asking them how their organization plans to adjust compensation for salaried employees to match inflation. The business leaders had to choose between all employees or top performing employees; they also had to choose between selected -- markets where inflation was the most severe -- or all markets. 

Nearly 25% of respondents voted for the most restrictive approach, offering pay increases to only top performers within selected markets. Another 27% voted for raises for only top-performing salaried employees in all markets. This means that a little more than half of the surveyed CEOs and CFOs are opting for a performance-based approach. 

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Gartner (August 2022)

"Rising labor costs are among the most negatively impactful to operating cash flow, and it follows that we see a more limited approach to pay rises either by performance or in select markets for now," said Randeep Rathindran, vice president of research in the Gartner Finance practice. "Organizations will continue to look at benefits beyond compensation as an approach to fight employee attrition and keep costs across the labor force as balanced as possible."  

Despite resisting salary increases in the near term, Rathindran says additional survey data indicates they are planning for heavier compensation investments in the future, with 43% of respondents planning to deploy one-time bonuses to employees in addition to regular pay adjustments. Another 39% of respondents said they plan to fully or partially index pay adjustments to inflation. 

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