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Trained, skilled workers are in high demand and short supply. This high demand for scarce talent has caused upward pressure on salaries. Wages are at an all-time high in some sectors, such as manufacturing, construction, technology, and healthcare.
Rising wages adversely affect companies in two ways.
1) Companies may need to offer larger compensation packages for new hires than was necessary in previous years.
2) New hire compensation packages may exceed compensation paid to existing employees for similar roles.
As a result overall compensation budgets may increase as companies bring current employees’ salaries up to current market rates.
SHRM, Society of Human Resource Management, reports that salary budgets will increase by 3 percent on average in 2018 according to. The 3% forecasted by WorldatWork, an association of total rewards professionals, is just slightly higher than the 2% Social Security cost-of-living adjustment (COLA) for 2018 which is based on the percentage increase in the Consumer Price Index.
Although these projected increases reflect overall averages, you should expect to pay substantial more for key positions that are in hot demand like sales professionals, software developers, engineers, and construction project managers.
As you begin your 2018 recruiting efforts, do these three (3) things to avoid losing quality candidates over compensation issues:
1) Include market rate compensation data in your job postings
2) Make quick hiring decisions to avoid losing your top candidates to competing offers
3) Present your best offer and be flexible when negotiating
Although we would like to think that money is not the primary motivator for candidates, we need to be realistic that there are a lot of good companies with good positions competing for the same talent. So, if all else is equal, money will win the war on talent!
If you need help determining compensation market rates for your upcoming hire, give us a call at 317-578-1310.