Most companies are planning on increasing salaries and adding employees in 2021, according to the Palmer Group’s annual salary guide released this morning.

The survey was sent to about 2,200 Central Iowa companies on Oct. 6. Nearly 150 responses were received. 

The survey asked three questions: What are your compensation plans for 2021? What are your hiring plans for 2021? And what employment challenges do you anticipate in 2021? Under the last category, companies were given four choices, plus an option of “other,” to indicate a challenge that may not be listed in the suggested responses.

David Leto, president of the employment agency conducting the survey in collaboration with the Greater Des Moines Partnership, said it is done each year to help companies and job seekers plan for the future.

“It helps us get a pulse on what our client companies and organizations in Iowa are thinking about,” he said. “We think it’s helpful to our client companies and we think it’s helpful to those who are job seeking as well to get an idea or range on what the markets are bearing right now.”

Responses to the first question on compensation plans show that most companies are planning pay increases to varying degrees, Leto said.

According to survey results, 81% of those responding plan an increase in pay of some level in 2021. Nineteen percent indicated they have no plans to increase pay next year. To break that down further, 39% plan to increase pay 3-4%, and 31% plan to increase salaries by 1-2%. Eleven percent of those responding plan pay increases of 5% or more, the survey showed.

The percentage of companies planning pay increases was down from 96% in the 2020 survey.

Increases in pay in 2021 were a bit unexpected, Leto said.

“We were anticipating maybe some decreases in salary in 2021, but we’re not seeing that,” he said. “A lot of companies that were going to do that did that during the middle of the pandemic, and lowered salaries at that time, so we’re not anticipating much in the way of salary decreases … in 2021.”

More than half of the companies (56%) responding indicated they plan to add staff in 2021, and 40% said no staffing increases are planned. Four percent indicated they plan to decrease staff size.

The top challenge anticipated in 2021 was retention, with 30% of the companies responding that was their primary concern next year, closely followed by hiring at 27%.  

Other choices given on the survey were training (19%) and succession planning (17%).  Respondents who listed “other” expressed concerns around challenges they face as the coronavirus pandemic persists. Those include pandemic-related layoffs, balancing working in office and remote working, employee and customer engagement, distancing and use of masks, and bringing back employees who have been furloughed or have had hours reduced.

Leto said the uncertainty surrounding the pandemic and how long it will continue was a big factor in how respondents answered the question about anticipated challenges in 2021.

“If companies are having difficulty retaining their employees, hiring will be right behind that,” he said. “We challenge employers to focus on that retention piece. It  makes the hiring part a little easier if you can keep your top talent in place.”

Leto said challenges are different as companies face balancing a remote workforce.

“It’s just a lot more interesting and different these days with so much remote workforce,” he said. “None of us have really been trained in how to manage a remote workforce, so we’re all learning here a little on the fly.”

Although the topic of remote working wasn’t directly addressed in the survey, it will be a factor in planning, Leto said. 

From limiting hours or staggering workdays to shutting down offices, no two companies are the same, he said.

Issues like workplace culture, the mental health of employees and productivity are among the factors employers must consider when making decisions to return to the office, Leto said.

“Everybody’s a little all over the board, in my opinion,” he said. “It’s really a wide spectrum. It’s been pretty interesting to hear everybody’s stories.”