The ongoing labor shortage and how companies are responding to it dominated responses to the 2022 Palmer Group annual salary guide released this week.

The survey, done in collaboration with the Greater Des Moines Partnership, was conducted last month, with about 140 companies responding. It contains questions about companies' plans to increase wages in 2022, hiring plans for the upcoming year, and what employers’ chief concerns are for 2022. This year’s survey also addressed the topic of remote and hybrid working.

“The guide is really intended to help employers and individuals as they are not only looking to hire talent, but retain the talent they have,” said Dave Leto, Palmer Group president. “We hope it’s just a good resource for everyone to rely on. We try to use this as a baseline to at least start this conversation and have people use this … to really zero in on what makes the most sense for their company.”

According to data contained in the guide, 94% of those responding indicated they plan to increase employee pay in 2022. The biggest jumps were in the number of employers planning on increases of 3-4% and 5% or more. Those planning increases of 3-4% jumped from 39% last year to 54% this year, and those planning increases of 5% or more doubled from 11% last year to 22% in this year’s survey.

Those planning no increases dropped sharply from 19% in 2021 to 6% for 2022, the guide showed.

Leto said the trends heading into 2022 indicate the employers are working to figure out how to retain employees because of challenges created by the ongoing labor shortage.

“I think companies are really trying to figure out where they need to be to stay competitive, and to make their employees feel valued through these tough times,” he said. “There’s less people out there. Demand has never been stronger in my 20-plus years in the industry. If you lose an employee, it’s harder to get back what you had, so companies are really focusing on how do I keep my folks.”

Leto said while salaries are important, more companies are looking at new and creative ways to attract and retain top talent, such as more flexible work schedules, signing bonuses, training programs, and support for transportation and child care.

“What else can you do, how else can you make things work where your employees feel valued not only by the compensation they’re taking home, but valued as professionals? But the shortage of supply is definitely driving up wages, for sure,” he said.

The guide, published Monday, shows 69% of companies responding plan to increase staff in 2022, up 13 percentage points from 2021, with 31% forecasting that staffing levels will remain the same. None of those responding plan to decrease staff, an improvement from 4% last year.

Leto said the increase in companies that plan to add staff will create a candidate-driven job market that will stretch into 2022.

“We’re just seeing the demand everywhere, from the positions we work on to the local convenience store,” he said. “I think part of that is maybe hiring proactively, and part of it is just keeping up with the demand.”

He said companies need to reevaluate their hiring strategies to be competitive.

“Just because they’ve done it one way all these years does not mean they should continue doing it that same way,” Leto said.

Companies need to streamline and expedite their hiring process, make sure they express interest in a candidate before an interview is over, and be more open-minded to hiring people with less experience and train and groom them for the future, he said.

According to the guide, hiring and retention remained the top two challenges heading into 2022, with 39% of those responding indicating hiring was their top concern, followed by retention at 31%.

Training (16%) and succession planning (13%), were other concerns identified by those responding.

“I think hiring and retention really go hand in hand,” Leto said. “Companies need to be proactive in their hiring to plan for what retention issues may happen down the road.”

The guide also showed that 59% of those responding said they plan to keep a hybrid option available for employees. It also showed that 39% anticipate a 100% return to the office in 2022, with just 2% indicating they will stay fully remote.

Leto said many companies will likely continue to struggle with their return-to-work plans in 2022.

“It’s certainly a topic in the boardrooms with executives trying to figure it out, and it’s a topic with the employees,” he said. “Not everybody wants hybrid, and not everybody wants to be at home. There’s a healthy part of the population that wants to be in the office on a regular basis, but wants that flexibility to work from home. Having that flexibility is important. What hybrid means to one person is going to be something different to someone else.”

What is the big takeaway from the 2022 Salary Guide?

“Change is the only constant,” Leto said. “Things are changing so fast that it is really hard to foresee what things may look like in six months from now or even this time next year. Change has been continual, and we’ve lived through it the past couple of  years.”