HR professionals in the U.S. say inadequate compensation is the biggest reason employees are quitting, according to new findings from the SHRM Research Institute. The survey report from SHRM, Society of Human Resource Management, further indicates that inadequate compensation, the most common driver of turnover, ranked among the top three reasons by 74 percent of respondents and listed as the top reason by 39 percent.
The Great Resignation has lessened in recent months yet quits along with job openings are still higher than pre-pandemic 2019. Although the high employee-centric environment of 2022 has shifted downward in recent months, employers are still struggling to find top talent.
High demand for scarce talent causes upward pressure on salaries. Inflationary issues are also affecting the rise is compensation demands. Employers are faced with many compensation challenges when hiring new employees.
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.
As you plan for your 2023 hiring, do these five (5) things to avoid losing quality candidates due to 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. Although fewer jobs are now 100% remote than a year ago, the percentage of applications that went to remote jobs is over 50 percent in October 2022.
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.