Employers are having to become more creative with pay as growth of base salaries remains sluggish and competition for talented recruits continues to gain momentum.
Being able to hire promising recruits and retain valued employees is a struggle with pay raises overall having barely exceeding 3% in the last several years, Bloomberg BNA reports.
The low growth in wages is confusing when demand for labor is high, says Jim Link, chief human resources officer for Randstad North America. Companies need to do their best to "focus on what's really important to employees, because the employees are starting to get restless," Link says.
More employers know that if they don't up their game when it comes to compensation, they risk losing their best workers to competitors, he adds. "We're seeing employers react in different ways to the market," Link says. "They aren't just giving out increases in base pay, but essentially getting smarter about how they handle pay packages."
So employers are dealing by focusing on spot bonuses, equity rewards and other pay plans on top of traditional pay raises, research from Randstad finds. But companies surveyed by PayScale are having a tough time, with more than 50% expressing concern about retention, but most saying they will keep raises to less than 3%.
"We see a lot more people talking about variable pay as a potential retention strategy," says Lydia Frank, vice president of content strategy at PayScale. "There are all types of bonuses being used. They know it's part of their total compensation philosophy."
Variable pay may be a good short-term fix for keeping talent from fleeing, but employers who neglect giving their workers competitive pay raises are at risk of losing them, Frank notes. "If they don't feel like they're secure, with their salaries keeping up with inflation, they will start to question whether your organization is serious and if they are getting the value back for their time with the company," Frank says.
The lifer-type loyalty that employees may have once cherished with an employer is no longer there, so companies need to do more if they care about retention, Frank notes. "It's something for companies to think about, if retention really matters to them," she says. "Spot bonuses aren't necessarily going to cut it. It's one of those things where the kind of feeling it creates fades quickly. It has a short half-life. The bonus is less cost for the company, but is less impactful for the employee."
Companies in the healthcare industry will have an especially tough time finding recruits this year, according to Careercast. The aging Baby Boomer population will help fuel demand for jobs in healthcare, with half of the 10 toughest jobs for employers to find workers this year being in that industry.
"Nurse practitioners, with a growth outlook of 31%, and Physical Therapists at 34%, are two of the most in-demand fields...," Careercast notes. "The American Physical Therapy Association has forecast shortages in the profession, and the solution may not be as simple as adding new physical therapists to the workforce, as it is retaining current workers."
A new Korn Ferry report finds that the limited labor pool amid a vibrant job market is forcing human resources departments to deal with new challenges in recruiting and keeping talent, Hunt Scanlon reports. One positive for firms is that technology will make it easier for them to line up their business strategy to their talent strategy, says Byrne Mulrooney, CEO of Korn Ferry's Futurestep division.
"Technology frees up experts in our profession to do what they do best--offer sound advice to their business partners, create a warm and welcoming candidate experience, and get results," Mulrooney says.
And while the weaker job market of the recent past may have allowed employers to neglect recruitment efforts with many workers reluctant to leave, that is no longer the case. That means recruiters from competitors are more likely to poach less than satisfied employees from other companies by offering better pay packages.
"With low unemployment rates and increased need for specialized talent, keeping new hires is a critical issue," says Bill Gilbert, president North America, Futurestep. "It is incumbent upon recruiters and hiring managers to paint a clear picture of what will be expected of the candidate in his or her new role, and make sure promises of resources, job structure and reporting relationships are fulfilled."
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