Trained, skilled workers are in high demand and short supply. High demand for scarce talent causes upward pressure on salaries. Recruiting talent is a challenge for many employers, particularly those in sectors where wages are at an all-time high – for example, manufacturing, construction, technology, and healthcare.
Finding talent can be difficult, yet once you find your superstar, you may experience unexpected challenges regarding compensation.
Rising wages may require companies to:
1) Offer larger compensation packages for new hires than was necessary in previous years.
2) Provide new hire compensation packages that may exceed compensation being paid to existing employees for similar roles, resulting in possible resentment and attrition among long term employees.
3) Settle for less experienced talent that require more training and longer ramp up times in order to fit compensation budgets.
The Society of Human Resource Management (SHRM) reported that salary budgets would increase by 3 percent on average in 2021. While this is just an overall average percentage, you should expect to pay substantially more for key positions that are in hot demand like sales professionals, software developers, engineers, construction project managers and skilled labor.
As you plan for you 2021 hiring, 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 is still very important. There are many 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.