December 8, 2020
Even though circumstances have changes since this blog was originally written, the action items remain the same today. The war for talent will continue its pendulum swings so we must ensure we are always evaluating our compensation structure to ensure we are providing a competitive and appropriate total compensation package for our employees.
Today the Bureau of Labor Statistics released some alarming news for employers. Job openings were up again in October bringing the total number of openings in the U.S. to 7.3 million jobs! This is great news for our economy – we are growing. But it also means it is getting harder and harder to fill open positions.
The BLS also reported this month that the number of unemployed workers stood at 5.8 million. This is a difference of 1.5 million! If everyone who could work did work, we would still have 1.5 million open positions.
So, what does this mean for employers? Two things: First – finding the right candidate has been and will continue to be difficult. Skillset, cultural fit, timing, experience and pay are all areas of concern for both the applicant and the employer. If the company isn’t offering a competitive compensation package, they don’t stand a fighting chance to land that next great employee.
Second – keeping your best employees is also becoming a challenge. With so many employers looking for great people, recruiters are constantly calling potential employees to talk about their next move…your employees included. Some of the best employees can receive multiple calls a week from recruiters and headhunters! Are employers giving those top employees a reason to be looking or are they secure in their role because of the value of their contribution to the company, and the value of what they are receiving in return.
Look at it a different way. Employers are sometimes like the dreaded cell phone or cable company. The cell phone company will treat current customers like a commodity – slowing raising rates and taking away benefits but will offer hundreds of dollars worth of incentives to bring on just one new customer. This year many employers will offer raises to current employees that range from 2-5% with an average of 3.1% according to the research. However, employees changing jobs can see a bump in pay from 10-20% with the new employer. Why wouldn’t all employees start looking for a new job?
Here are three things you can do to stem the rising tide of employees leaving your organization and also attract the best candidates to your company.
1. Develop a compensation strategy
This doesn’t mean asking a candidate how much they were making and adding a $1 per hour or $5,000 a year in the new role. Instead, you need to determine how to price your jobs for your market and your industry. In addition, how will you position the company in terms of compensation? Will you be a leader, paying in the top 25% of employers, a laggard in the bottom 25%, or one of the average employers right in the middle. Finally, do you need to offer a bigger raise to your top performers to bring them in line with the competition?
2. Ensure your company stands out from the rest
Look at your benefits package and be sure it’s at least on par with your local competitors. (Competitors include those in your industry, but also those competing for your employees.) In addition, what do you offer that is new and original? Employees spend more waking time with their co-workers at your offices than they do with their families at home. It has to be inviting, fun and balanced. Who wants to work somewhere they dread going to daily?
3. Make employees feel their contribution is valued and let them know how they are doing
Train, train, train your company leadership. Are they connecting with the employees? Do managers provide valuable feedback on their employees’ performance? Do employees question whether or not they are respected and valued at their company? If answered wrong, these negative moments can help move an employee out the door at the slightest misstep. A key question to ask is what are my employees saying about the company and their job. Do they love it, or hate it?
Employee surveys can capture general feedback from your staff, but one on one conversations give you so much more. Be sure your environment welcomes this type of feedback, or you will end up with a lot of “yes” men and women on your team, and no real data.
Additionally, reliable and accurate compensation data will go a long way to ensuring you are competitive in your marketplace. We offer a comprehensive tool through Payfactors to do just that at no cost to you. Click here for the Payfactors Free tool to find HR-sourced data on your positions, in your market.
Competitively paying your employees is just one piece of the puzzle to attracting and retaining your best talent. However, it’s a very important piece. Without it, the opportunities you have to offer employees will be incomplete. Now more than ever, employers must ensure every piece fits together to complete your compensation strategy and keep your edge in the workplace.