There’s no debating that we are currently living in a candidate’s market, giving today’s job seekers a major advantage during their job search. According to a study from the Bureau of Labor Statistics (BLS), there were 10.7 million job openings in the U.S. at the end of June 2022 with 3.6% unemployment. With so many open jobs on the market, candidates have the upper hand regarding what they want from their current or future employer. Employers need to anticipate and meet candidates’ requirements to ensure they fill their vacancies.
It’s essential today for company leaders to come up with solutions to entice the best talent to work for their organization. A trend we have been seeing over the past few years as more and more jobs were left unfilled, is an increase in the compensation being offered to candidates. Offering current and potential employees greater compensation will allow you to stay ahead of your competitors and ensure candidates are joining your organization over your competition. Money isn’t everything, but it definitely makes a difference.
Why Companies Should Offer Higher Compensation
On average, U.S. employees saw a base salary increase of 4.8% last year, according to a study released at the start of 2022. Since wages are increasing across the market, potential candidates and current employees are demanding to have their compensation raised, too. Employers have to adapt to these demands if they have any hope of filling their positions in this challenging candidate driven market.
Another reason that companies should provide better compensation is because many people’s outlook on work has shifted during the pandemic. People tend to value their personal time and relationships more now, so they want their working hours to be compensated fairly. Two of the driving factors behind why employees are demanding increases include wanting to feel genuinely valued and appreciated for their effort at work.
Employers also need to take the high inflation rate our nation is currently facing into consideration. Rising household costs can bring uncertainty and worry from employees into the workplace. If companies are able to respond with salary increases that can help combat the rising costs, employees will have peace of mind and be able to focus on work. Higher inflation requires higher compensation.
The Benefits Outweigh the Costs
You might be reading this and thinking that raising every employee’s compensation will cost your company too much money. Although it will initially increase your operating costs, the investment will be well worth the reward for several reasons. One of the most important reasons is simple – offering better compensation will allow your organization to attract better talent to increase productivity. This includes the ability to attract passive job seekers or individuals who may not be actively seeking a new job. They could be persuaded with an enticing compensation package.
Boosting your employer brand is another benefit to make up for the cost your organization will be incurring. Fairly compensating your workforce shows that you care about their wellbeing, thus attracting new talent and increasing retention rates. Additionally, your employees will be more inclined to work harder for you and help you achieve your business goals. If you treat them right, they will pay you back with a dedicated work ethic, leading to improved productivity and exceeding sales or service goals.
Ensuring your organization has competitive compensation rates, will also shorten the time to fill open positions. If you are trying to hire someone and the salary negotiation goes awry, they might walk away which would be a waste of your organization’s resources. However, if you go to market with a satisfactory offer from the start, the time-to-hire will be reduced, positively impacting your company in the end. With all these benefits coming to fruition, your company will realize that the benefits do in fact outweigh the costs.
A Talent Partner Can Help
Once your organization is ready to start ensuring your employees’ compensation is competitive, it might be best to consider engaging the help of a talent expert. Companies who specialize in talent solutions, like DZConneX, are there to help you use data to ensure your salaries are in line to compete for top talent. Based on industry experience and an in-depth understanding of market trends, talent experts know what good compensation packages look like better than anyone else.
Our experts can also provide an accurate pulse of pay rates based on real-time, data-driven recommendations. Our access to industry insights and experiences with our own clients allow us to provide first-hand knowledge regarding what your employees will want. Utilizing a talent partner’s advisory services will ensure that your organization is attracting the best talent while taking some of the burden away from your internal teams.
A good talent partner can also help you identify a plan detailing what your employees’ compensation packages will include. Compensation does not just mean salary; it can be an employee’s salary, bonuses, PTO, benefits, etc. Talent partners know what’s best here, so using their insights and expertise regarding what the best package entails could benefit your organization immensely.
Talent partners can help you with more than just deciding on how to compensate your employees. Once you begin a partnership, they can improve your organization in other ways if you request it – like outsourcing recruitment, determining the right supplier strategy, supplier management, Independent Contractor Vetting, or payroll service as the employer of record.
In the same way it is surprising how much gas prices have increased, companies who have not been hiring over the past few years are experiencing shock at what qualified candidates are demanding for salaries. With our insights into the supply and demand of talent in today's competitive candidate-driven market, our clients are able to attract and retain the talent they need to build their workforce.