As the battle for talent continues to blaze on, employers are turning to new methods to attract and retain the best of the best. Skill shortages continue to plague the fastest growing industries, even those traditionally stocked with a ready supply of workers.
In response, HR practitioners are driving a movement towards transparency in compensation, culture and other perks to attract top candidates.
How salary transparency addresses skill shortages
The World Economic Forum attributes these growing shortages to several factors, including the present rate of technological evolution, socio-economic disruption and demographic changes, which have transformed business models.
Cloud technology, flexible work arrangements and growing middle class populations in emerging markets have exacerbated skill shortages. When these things change, job requirements and skill sets also change — leaving too few candidates to go around.
According to the 2017 PayScale Compensation Best Practices Report, nearly half (49%) of all organizations plan to boost organizational transparency about pay, benefits and other perks this year. Another 34% of these companies told PayScale that they are issuing the highest base pay increases (10%), with one-in-ten giving at least a 5% increase or more. The technology industry is more likely to hand out pay raises, and nonprofits are least likely.
The top five reasons for giving raises? Performance, retention, job market adjustments, cost of living adjustments and resolving internal pay inequalities.
Even those in leadership roles are concerned about their salaries, with 57% of companies agreeing that C-Suite employees are paying attention to compensation. As more millennials and Generation Z rise to mid-level and upper management roles, observers expect that percentage of companies to increase.
One fact that stood out is that employees and employers still do not see compensation as fair. The PayScale report showed that while 44% of employers say they believe their employees are being paid fairly, only 20% of employees think so.
How does this last factor affect recruitment and retention?
Today’s employees shop around for new jobs constantly; we have a workforce that’s only about 30% engaged, and this lack of engagement leaves more people searching for something better.
Salary is often the reason people choose one company over another.If an employee works for a company that offers great starting wages and has a progressive compensation process based on clearly defined performance metrics, it will attract and retain more skilled workers.
If the company allows wages to become stagnant, and employees start viewing compensation as not fair, it can pretty much kiss its best employees goodbye. And good luck recruiting more talent, because there will already be some negative discussion going on at company review websites and through word of mouth.
Companies must do all they can to ensure they are paying fair industry wages and then checking in with employees to make sure they feel the same.
What can organizations do to improve their compensation strategy in 2017?
The ways in which companies broadcast and pitch their compensation to candidates and employees alike has to improve. Mykkah Herner of PayScale told ERE Media’s TLNT that “more companies will adopt more transparent pay policies to lift the veil of secrecy around compensation.”
Younger generations of employees are more comfortable discussing salary, therefore companies that can provide greater insight into pay practices, gender equity and benefits are more apt to appeal to this sector of the workforce.
How do you improve salary discussion in the workplace? HR departments should begin a total review of the present compensation before designing ways to improve how and when compensation is communicated.
A simple marketing document can be used to show potential candidates what they should expect in terms of starting pay, benefits and other perks. Once hired, employees can be provided with a more detailed and specific plan for their salary increases based on well-defined performance goals.