Navigating 2024 Pay Planning Complexity
As we stand at the threshold of the fiscal year 2024, anticipating salary increases for your restaurant team and strategizing compensation planning becomes a critical aspect of your overall business strategy. In this blog post, we’ll provide a comprehensive guide, combining insights from reputable sources and practical advice to help restaurant owners and HR leaders align their compensation strategies with industry benchmarks.
Salary Increase Projections for 2024:
As we project target merit increases to hover around 3%-4% per employee in 2024, flexibility becomes crucial to accommodate varying circumstances. Some employees may receive more or less than the target, while others might not see an increase at all.
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The Conference Board’s Insights (4.1%):
The Conference Board’s latest report specifies a 4.1% increase in salary projections for 2024. This figure serves as a robust benchmark, offering a clear indication of the economic landscape and valuable insights into industry standards.
Link to the full report: The Conference Board’s Salary Increase Projections for 2024
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Mercer’s Salary Budget Data (3.9%):
Mercer’s extensive data on salary budgeting trends reinforces the industry’s direction, projecting an average increase of 3.9% in 2024. Understanding these broader economic trends is essential for restaurant owners, ensuring they make informed decisions that keep their team motivated and engaged.
Link to the full article: Mercer’s Salary Budget Data Indicates 3.9% Increases in 2024
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Social Security Benefits Increase (3.2%):
Considering broader economic indicators, the Social Security Administration’s announcement of a 3.2% increase in benefits for 2024 further emphasizes the importance of aligning pay increases with overarching economic trends. This adjustment will impact over 71 million Americans, illustrating the significance of staying competitive in compensation practices.
Link to the full article: Social Security Benefits Increase in 2024
Start Planning Your Q1 Compensation Routines Now:
Compensation is a year-round activity, and initiating Q1 routines early is crucial for a successful year ahead. Focus on talent calibration, aligning your compensation strategy with the performance and potential of your incumbent team. Assess recent hires and individuals who received pay adjustments, ensuring equitable treatment across your workforce. Consider identifying high performers ready for promotion, incorporating cost-of-living adjustments, merit pay, and promotional pay into your planning.
Here’s a look at a four-quarter compensation planning roadmap:
- Q1: Talent Calibration, New Hires, and Recent Pay Adjustments
- Q2: Merit Increases and Performance Reviews
- Q3: Market Analysis and Compensation Benchmarking
- Q4: Annual Bonus Programs and Year-End Adjustments
Factor Economic Uncertainty into Your Bonus Programs:
As you plan for Q1, consider the economic uncertainty of 2024 when designing or adjusting bonus programs. Be cautious of programs heavily influenced by annual budgets and those predominantly driven by sales and traffic.
Two key considerations for your 2024 bonus program design:
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Budget-Driven Bonuses: Given economic uncertainties, design bonuses that don’t overly rely on annual budgets, considering the complexities of the supply chain and customer traffic.
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Sales and Traffic-Driven Bonuses: While important, in a year with economic headwinds, focus on the “journey to sales and traffic” or cash flow through to the bottom line, considering the variability of sales and traffic.
As you design your bonus program for 2024, strike a balance that neither becomes a disincentive in economic downturns nor feels overly achievable if conditions exceed expectations.
Conclusion:
In conclusion, our projections for the fiscal year 2024 recommend targeting merit increases around 3%-4% per employee. Initiating your Q1 compensation routines early, considering talent calibration, and bonus program adjustments will set the tone for a successful and strategic year ahead. Stay tuned for more updates and guidance as we collectively navigate the evolving landscape of the restaurant industry.
Interested in tools for attracting, motivating, and retaining top talent?
Check out our Restaurant Total Rewards Toolkit.
The Restaurant Total Rewards Toolkit is a compilation of essential resources to help you build a robust and effective total rewards program. With our expertise and guidance, you’ll create a competitive advantage that attracts and retains exceptional employees in the highly competitive restaurant industry.
Consult to Grow® is here to breakdown the complexity and assist you in thriving in reaching your 2024 goals:
Contact us for annual pay planning advice and/or annual incentive plan design for unit-level and multi-unit bonus design. We can also offer you access to market pay data for home office positions (specific to your geography and company size) using Salary.com’s Comp Analyst tool for a flat fee per position. Learn more about our Single Job Market Pay Study here.
Consult to Grow® provides various tools and services to help you develop people strategies to grow your team. We can expertly assess your HR infrastructure, develop custom Employer of Choice strategies, facilitate leadership meetings and retreats, help you design bonus and incentive programs, and design managing partner programs. Ready to get started?