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 also 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 raising wages across the board.
3) Settle for less experienced, lower paid talent that require more training and longer ramp up times.
The Society of Human Resource Management (SHRM) reported that salary budgets would increase by 3.9 percent on average in 2022, up a full point from 2021. While this is 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 your 2022 hiring, do these five (5) 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 a competitive offer with a meaningful increase over a candidate’s current pay
4) Be flexible when negotiating offers regarding PTO time and remote work
5) Avoid emotional attachment to the outcome
Although we would like to think that money is not the primary motivator for candidates, we need to recognize that studies indicate that money is the #1 most important factor. There are many good companies with good positions competing for the same talent. So, if all else is equal, money wins the war on talent.
After money, a hybrid or remote work environment is now a close second priority when candidates consider new opportunities. Generally, if the job can be done remotely, candidates may push for this option. If your company culture prefers employees to be in the office, be prepared to miss out on a significant pool of potential applicants.
If you need help determining compensation market rates for your upcoming hire, give us a call at 317-578-1310.