At the moment, several economic events and labor market developments are unfolding, and these will inevitably have repercussions for the future.

Given this backdrop, many employers cannot afford to wait and see if these trends are confirmed before taking action.

The budget season, which typically spans from September to October, presents an ideal opportunity to formulate an action plan.

It offers ample time to assess your needs, develop budgets, and create sales forecasts for the upcoming year.

Additionally, your employee compensation plan should systematically be part of this annual evaluation process. This will allow you to determine whether adjustments are necessary to remain competitive and attract new talent in the coming year.

Taking time to budget for your workforce ensures you:

  • balance overhead costs and budgetary needs with the compensation expectations of current and future staff
  • offer competitive compensation to support effective hiring processes and reduce employee turnover
  • reduce unnecessary recruitment costs because you can hire the right people faster

Randstad's salary guide provides you with valuable data that you can utilize during these crucial budget reviews.

Man working on a manufacturing site.
Man working on a manufacturing site.

To make the most of this information, follow these three steps, or consider arranging a meeting with our team to discuss your compensation strategy.

forecast the next year

Start with a big picture. What are the salary trends in your industry? Specifics do matter, because not all sectors jump when the market does.

You should also look at inflation to understand whether salaries might be rising — if your competitors start raising pay rates, you may need to follow suit to remain competitive as an employer.

Next, forecast your workforce budget for the upcoming year.

For now, we're not talking about monetary figures; before you get to that point, you'll need a list of all the employees you need to pay throughout the year as well as who you need to hire and when. 

For example:

  • what current positions will be maintained in the new year, and how many people are in each position?
  • to meet business goals, how many people do you need to hire for each of the existing positions during the new year and when? If you're growing your business 400% next year, you may need to increase certain parts of your workforce 100% each quarter, for example.
  • do you need to add new roles to your workforce to meet those business goals? For example, do you need to add an IT role to support automations required for scaling up?

Answering these questions lets you create a forecast of how many employees you need and in what roles at various times of the year.

You should also account for average attrition in your sector so you know how many people you may have to hire as you move forward.

This is also a good time to discuss other ways you can retain employees to reduce the expense of rehiring.

make a difference by paying the appropriate salary rates

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compare your salaries to the market

Here's where you start looking at actual dollar figures. Start by benchmarking your employee salaries. Is the market going up?

If you don't choose to raise employee salaries next year to remain competitive, you risk losing staff to competitors.

The same is true for new hires; if you're not offering a competitive salary and plenty of other companies are hiring, the best candidates may not even apply with you.

Once you know what you'll need to pay for existing positions to remain competitive, research positions that you want to add. Forecast the cost of adding them, including salaries and hiring costs.

You might wonder what you should do if you find out you're already paying over market rates, but that's a rare scenario.

It's much more common to find that you need to implement annual increases to keep up with the market (and keep top talent in your business). 

adapt budgets and headcounts

At this point, it's about math. Do the math to determine how much additional headcount you need and how much it will cost.

Then, make a business case to support that additional expense by demonstrating how the extra employees will lead to future cost savings and higher revenues.

You'll also want to increase workforce budgets to capitalize on upcoming opportunities.

Now that you have all the figures and plans in place, you can develop a complete compensation budget for your business or department.

It should include a full overview of raises to bring positions up to competitive pay, new roles that need to be hired and the expenses related to the hiring process.

Armed with all this information, you're ready to get leadership buy-in on your plan or move into the new year appropriately as a company leader yourself.

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