Despite Deceleration, Most CFOs Still Planning Competitive Pay Bumps in 2024

With eyes on compensation plans for the coming year, another report is painting a picture of where employers are with pay raises in 2024.

The vast majority of senior finance leaders (71 percent) plan to give raises of at least 4 percent in 2024, according to a new survey of chief financial officers (CFOs) by Gartner.

In most areas, those raises would outpace inflation, which recently has hovered just above 3 percent, according to government figures.

Although there has been a shift toward smaller pay increases compared with 2021 to 2023, when inflation was running near 8 percent, Gartner said, pay raises remain competitive. Most CFOs (58 percent) are planning 4 percent to 9 percent increases—although that’s a notable drop from the 70 percent who had planned to do the same last year. Fewer companies, too, plan to give out 10 percent increases (13 percent of employers, compared to 16 percent in 2023), according to Gartner.

Employee compensation is one of the top areas where CFOs are planning to increase budgets, second only to technology, where 82 percent of CFOs are planning an increase in 2024.

In addition to high cost of living driving employee demands for pay increases, employers are keeping an eye toward healthy pay boosts to remain competitive, said Alexander Bant, chief of research in Gartner’s finance practice.

“The fact that most CFOs are planning for pay growth that exceeds the level of inflation indicates how tight the labor market is right now and how important it is to find and retain top talent,” Bant said.

Gartner’s survey comes on the heels of Payscale’s annual compensation report, released last week, which similarly found that fewer employers are planning to give pay raises in light of a stabilizing labor market and cooling inflation, although pay increases are still continuing.

Payscale found that 79 percent of organizations are planning to give pay increases in 2024—the lowest number in years. That's a drop from the 86 percent that gave pay hikes to employees in 2023. Payscale similarly found that organizations predict an average base pay increase of 4.5 percent in 2024, compared to the average increase of 4.8 percent actually given in 2023. Some industries may increase pay as much as 6 percent, Payscale researchers noted.

Although amounts are cooling, Payscale noted that pay increases are still elevated compared to pre-pandemic levels and are viewed as an essential talent management strategy—especially as employee expectations have increased in regard to not only meaningful salary hikes, but also transparency about pay practices.

“Employers know that pay is critical and must be competitive and keep pace with the rising cost of living,” said Lexi Clarke, vice president of people at Payscale.

Although experts contend that employers should make pay raise plans based on their industry, budget and employee needs, data indicating the average pay hikes employers are giving is helpful so that organizations can get a baseline of where other organizations are.

Regardless of what employer surveys indicate about 2024 pay raises, recent reports suggest that employees are in fact looking for bigger pay hikes. That’s driven by factors including financial stress and a persistently high cost of living.

A recent survey of roughly 2,000 workers from the American Staffing Association and the Harris Poll found that more than half of workers (53 percent) feel their paychecks are not keeping up with the pace of inflation, while 38 percent of U.S. adults said their overall financial situation is more stressful than it was 12 months ago. Meanwhile, jobs site Monster found that 81 percent of workers said their current wage hasn’t kept up with the cost of living.

A survey of 1,500 workers from HR tech firm BambooHR earlier this year found that 73 percent of employees said they would consider leaving their current job for a higher paycheck. Those employees also noted they’d quit for a smaller raise than in previous years. Respondents said it would take a 13.3 percent pay jump to tempt them away from their current position, down from 16.1 percent in 2022.