As inflation has cooled relative to 2022 and 2023, standard compensation increases are projected to keep up with the inflation rate this year. CFOs, who alongside their fellow executives have had their own financial concerns, can now hand out nominal pay increases without worrying how they look in comparison to skyrocketing consumer prices.
New data from Gartner indicates that although CFOs are less likely to hand out higher pay raises than last year, increases are still being given, and many may outpace inflation. Nearly three-quarters (71%) of CFOs plan to raise compensation by more than 4% this year, according to Gartner.
Lower Inflation Justifies Average Raises
The slowing rate of inflation may be bailing out companies that either can’t afford or aren’t willing to match last year’s pay increases. When comparing 2023 and 2024, 70% of CFOs said they planned an average employee compensation increase of 4% to 9% in 2023 compared with 58% who said so this year.
Many more employees should expect nominal changes (less than 4% compensation increases) this year versus last as well. Last year, 9% of CFOs said they would hand out nominal raises, while more than a quarter (26%) will this year.
Many companies have made efforts to expand employee benefit offerings to enhance compensation packages. However, as health-care costs continue to rise and many of those extra benefits continue to go unused, some organizations may need a reevaluation of their overall compensation packages.
“Work-life balance, location, health benefits, and vacation are all significant factors that improve retention and give CFOs additional levers beyond relying on base pay increases,” added Alexander Bant, chief of research at Gartner Finance, in the report.
Avoiding Attrition
On top of total compensation, the work environment has a lot to do with an employee’s decision to stick around. As companies continue to push their employees back into the office, CFOs should be aware that such mandates reduce “intent to stay” by 8% for the average knowledge worker. The likelihood of a “high-performing” employee leaving rises by 16% if a return-to-office initiative is implemented.
For CFOs and other leaders, other data suggests that figure could be even higher. Deloitte data from last summer found that 66% of business executives would leave if forced to go into the office five days a week. This was the top reason, by a significant margin, for any executive leaving their current position.
This survey was taken in December of 2023. It polled 296 CFOs and senior finance leaders. The findings were published on March 20, 2024.