Personnel and Salary Developments in 2023 and Feedback Culture in Companies (4th Quarter 2022)
In the fourth quarter of 2022, the Randstad ifo Personnel Manager Survey covered wage developments in 2023 and special payments in the form of the inflation compensation bonus. This bonus is part of the German government’s third relief package, which is intended to offer citizens relief in times of high energy prices and inflation rates. The bonus is tax-free up to an amount of EUR 3,000 until the end of 2024. Other topics included personnel development in 2023 and the feedback culture in companies.
Strong Wage Increases Expected in 2023
In the employee group covered by the survey, wages will predominantly increase in 2023: 81 percent of respondents expect wages to rise by an average of 5.5 percent overall; 19 percent expect wages to remain the same; hardly any companies expect wages to fall. Wage increases are expected to be highest in trade at an average of 5.9 percent, followed by the service sector at 5.6 percent. By contrast, manufacturers expect wage increases averaging 5.0 percent. While 70 percent of respondents in companies with fewer than 50 employees expect wages to rise, nine out of ten respondents in larger companies with 250 or more employees and almost all respondents at companies with 500 or more employees do so. At 6.3 percent, average expected wage increases are slightly higher at smaller companies than at larger and large companies (5.4 percent and 4.8 percent respectively).
Tax-Free Inflation Bonus in Widespread Use
Some employees can also look forward to the payment of the tax-free inflation compensation bonus: 42 percent of the companies surveyed are planning to pay it out, while 44 percent have yet to decide. Only 14 percent have already ruled out this payment. One manufacturing company in two plans to pay out, with an average take-up rate of 79 percent. In contrast, service providers and trade businesses are somewhat more reluctant to make payments: 40 percent and 34 percent of the companies surveyed in these sectors are planning to do so. The average take-up rate for service providers is around 70 percent, and around 55 percent for retailers. There are also differences in the planned level of payout when differentiating between size classes. While the median take-up rate for companies with up to 49 employees is 50 percent, it is 100 percent for companies with more than 500 employees. This means that one large company in two – of those that have decided to pay out the inflation compensation bonus – is doing so in full.
Staff Expansion at Just over One-Third of Companies
In just under half of the companies, headcount is expected to remain constant in the first half of 2023 according to the personnel managers surveyed. In the remaining responses, an increase in headcount predominates (31 percent). As many as 5 percent of respondents are aiming for a sharp increase in their workforce. A reduction is expected by 16 percent of the participants, but there is hardly any talk of stronger decreases (2 percent). A look at company size shows that large companies with 500 or more employees in particular are planning to expand their workforce in the first half of 2023.
Shortage of Skilled Workers Increasingly Acute
On average, a good 80 percent of the personnel managers surveyed said they would be looking for skilled workers in 2023 – manufacturing (85 percent) and the service sector (84 percent) stood out particularly clearly. In trade, there were slightly fewer companies at 71 percent. However, survey participants face major problems in this regard. In 2020, companies were still most likely to anticipate some problems in finding new skilled workers. This changed considerably in 2021 and 2022, with major problems now being mentioned most frequently. There was also a significant increase in the share of companies expecting very serious hurdles.
Annual Feedback Meetings the Order of the Day
A good half of the companies surveyed conduct annual feedback discussions with employees. In trade, feedback discussions take place on a more regular basis: in each case, just under one in five companies conducts these semi-annually or even quarterly, and a good third conduct them annually. Broken down by size category, employees in smaller companies with up to 49 employees in particular have the opportunity to obtain feedback more frequently than in larger companies. In addition to the frequency of feedback meetings, their content also plays a major role. In this respect, 85 percent of the companies surveyed deal predominantly with satisfaction and motivation in feedback discussions. A comparison of size categories reveals significant differences in the content of feedback discussions: in large companies (500 employees or more), opportunities for further development are almost always part of the discussions (95 percent). Target agreements are also discussed in larger companies (250 employees or more), in contrast to smaller companies.
Feedback Pays Off
In times of a steadily worsening shortage of skilled workers, the importance of a satisfied workforce is growing strongly. A corresponding satisfaction survey of employees is carried out in two out of three companies. The information gained from the feedback helps to improve the corporate climate in almost every company. For two out of three companies, the feedback serves to optimize processes. Slightly fewer, however, use the feedback received for organizational development or productivity increases. The focus is also not on evaluating the manager. Overall, it is clear that the feedback culture has suffered setbacks over the past three years due to the pandemic: a lack of proximity and more irregular exchanges. Nevertheless, this crisis also provided opportunities to adapt existing structures. Many companies were able to implement improvements and build a more positive feedback culture. Only a few companies reported a negative feedback culture in their operations.
