We know, we know – monetary compensation is not the end all, be all of candidate attraction and employee retention, but we also know that it’s pretty darn important. At the end of the day, we all go to work with a common purpose, and that is to bring home a paycheck.
As the average time-to-fill steadily increases, and the skill gap widens, employers are having a harder time than ever walking that fine line between attractive compensation, and minding their budgets. Voluntary turnover can be extremely costly, and so can keeping an office chair empty for too long.
There is power in knowing what quality candidates are looking for, and how that is affecting compensation practices around you. Having this information from Payscale’s 2014 Compensation Best Practices Report can help employers find that sweet spot in attractive compensation. So, here’s what employers need to know about current compensation best practices, in order to stay competitive, while maintaining their budgets.
Raises on the Rise
In 2009, 28% of companies considered retention a main concern. Skip forward to 2014, and 57% of companies are now seeing retention as a main concern. Retention concerns, and many other contributing factors, have made raises quite common. In 2013, 83% of companies reported giving raises, and 77% of them gave raises to at least half of their workforce.
Employer Take-Away: Employees are currently expecting increases in pay, and your competitors are likely giving them. Wage stagnation isn’t something they are interested in sticking around for any longer. Be prepared to open your wallet, but it’s not all bad news, keep reading…
Pay for Performance is Popular
Employers aren’t doling out the cash haphazardly; they’re getting their performance management in check, before writing out the checks. The most common reason (at 54%) for raises in 2013 was performance-based pay increases. Additionally, incentive-based bonuses were the most common type of bonus given.
Employer Take-Away: Yes, you will need to either increase base pay, or start handing out bonuses, but these changes need to be made strategically. Pay for performance sounds like the way to go, but you have to have strong performance management to make those changes possible and effective. The implementation of BDAS in our client companies has made this transition in compensation easier to visualize.
Real-Time Labor Market Trends
Global leader in human capital solutions, CareerBuilder, suggests employers keep a close eye on real-time labor market trends. As talent pools swell and shrink, it is vital that employers understand the labor demands of their workforce. By doing this, organizations can more effectively guide their total recruitment strategy. We know from our own experience, the importance of identifying the current and projected state of the supply and demand of quality candidates within your industry. Location is also vital in creating competitive and attractive compensation practices. CareerBuilder’s Supply & Demand portal help employers answer vital questions like these with real data:
- How tight is the labor market for the position I need to fill?
- How could market saturation be impacting the compensation I need to offer for a position to be filled?
- In what locations, and for what positions, are companies having a tough time hiring talent?
- How can I better hire for emerging or hard-to-fill positions?
- Where and who are my biggest competitors hiring talent?
- Where should I open a new business?
Can You Keep Up?
Over half (54%) of companies in the Payscale study revealed that they are expecting to increase in size in 2014, a percentage that has grown steadily since the closing of the recession in 2010. Growth, coupled with the possible passing of The Fair Minimum Wage Act (which, if passed would mean raising the current minimum wage to $10.10), means that employers are going to need to revisit their current compensation practices in order to stay relevant as an organization.
Employers are (hopefully) well aware that simple gestures of recognition and value toward their employees can have a positive effect on the employer brand and employee retention. The fact still remains that “seeking a better paycheck” was one of the top reasons employees left their positions in 2013. With attraction and retention, both growing concerns among our client companies, now is the time to take a look at your compensation practices in a more strategic light.