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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 new, 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 may exceed the 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 to fit their compensation budgets which may require more training and longer ramp up times.
As a result, overall compensation budgets may increase as companies increase salaries to current market rates.
The Society of Human Resource Management (SHRM) reported that salary budgets would increase by 3 percent on average in 2019. 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 consider 2019 3Q and 4Q 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 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.