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In 2024, CFOs are placing a significant emphasis on increasing employee compensation, according to a survey conducted by Gartner Inc.
Despite tightening economic policies and pressures for growth and productivity from stakeholders, 71 per cent of CFOs plan to boost average enterprise-wide employee compensation by more than 4 per cent, outpacing the rate of inflation in most major markets, the survey report said.
“Seventy one percent of CFOs plan to increase average enterprise-wide employee compensation in 2024 faster than inflation,” said Alexander Bant, chief of research in the Gartner Finance practice.
This prioritization of compensation ranks second only to technology investments, with 82 per cent of CFOs intending to increase budgets in this area.
Trends in CFO Planning: Balancing Pay Increases and Retention Strategies
The survey also highlighted a noteworthy trend: despite a movement towards smaller pay increases, the proportion of CFOs planning substantial increases of 10 per cent or more has slightly decreased by 3 percentage points compared to the previous year. Currently, the majority, at 58 per cent, are aiming for increases ranging from 4 per cent to 9 per cent, indicating a notable shift from the higher percentage of CFOs who had similar plans last year.
Furthermore, the survey emphasized that the finance sector is experiencing increasing employee pay expectations, with finance professionals anticipating a 7 per cent growth in base pay.
Alexander Bant stressed the importance of retention strategies beyond compensation, stating, “CFOs know they can’t pay their way to retention forever and meet rising pressure on cost and profitability.” He emphasized factors like work-life balance, location flexibility, health benefits, and vacation policies as significant drivers of retention.
The survey also highlighted potential challenges posed by return-to-office mandates to retention. Research indicates a decrease in employee intent to stay when onsite mandates are implemented. Finance leadership is urged to carefully consider the attrition risks against potential benefits, given the difficulty and cost of replacing departing employees in the current talent market.
About the survey: In December 2023, Gartner polled 296 CFOs and senior finance leaders to understand how budgets and spending will change in 2024.
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