Salary Budgeting Guide- Compliments of HR Association of America

5 Important Factors to Review when Determining Salary Budgets:

  1. Organizational Finances- Review your organization’s financial status and financial performance.
  2. Organization’s Pay Strategies– Determine and/or review the organization’s pay stragies.  Does your organization need to lead the market, match the market, or is it acceptable to lag the market in pay salaries/wages. 
  3. The Market– Review market practices, competitor pay rates, and projected pay increases.
  4. Costs/Inflation– Evaluate inflation and cost metrics.
  5. Affordability– Determine what your organization can truely afford.

5 Important External Metrics to Use When  Reviewing and Determining Salary Budgets

  1. CPI- U Consumer Price Index– Consumer Price Index for All Urban Consumers- Represents more than 80% of the population.   The CPI-U is a good measure to determine the impact of rising consumer prices on employees.   Many employers refer to the CPI to assist with budgeting upcoming next year’s wages.  
  2. Employer Cost Index– The Employment Cost Index (ECI) measures the change in the cost of labor, free from the influence of employment shifts among occupations and industries.  The Employer Cost Index is referenced by many organizations and compensation consultants to determine appropriate upcoming wage adjustments.
  3. Online Job Postings-  Review online job postings in your market or local area for wage data.   You may notice a trend of increasing salaries.   You may not always find wages posted, however, the trend of posting wages online is increasing.  
  4. Surveys- Review and search online for wage studies and surveys.  Many organizations and/or professional associations conduct salary surveys and post results online.   
  5. Bureau of Labor Statistics (BLS)- The Bureau of Labor Statistics is a good online resource to check and benchmark various position’s salaries.   Please note, the wages reported in the BLS may not reflect your local market and can be over a year or more old.   

For 2022 Salary and Wages Increases, click Salary Increases and Adjustments 2022