Software firm Capterra found in a survey that 65% of hiring managers say beginning pay at their companies are, on average, 9% higher than usual now because of inflation and the labor shortage. More than 635 workers and 650 hiring managers were surveyed.
Long-time employees are not happy, with 68% of hiring managers noting that at least one of their direct reports has requested a raise or threatened to resign because of new hires receiving higher starting pay. “Companies are having to pay new hires more, causing pay discrepancies with current employees. Those current employees learn of the discrepancy but don’t always get the raise they want to address it,” notes Brian Westfall, principal HR analyst with Capterra. “Finally, those employees quit to go somewhere else that is offering new hires more money—starting the whole conflict all over again.”
Westfall advises human resources leaders to carefully review their overall employees’ compensation to spot any glaring differential in pay between new and existing workers. “You may not be able to increase salaries and fix every discrepancy you find, but hopefully you can close the gap in the worst cases,” he says.