Great Resignation or Great Retention? Your Compensation Strategy May Decide
As the new year begins and the pandemic continues, employers are facing more challenges than ever to hire talent, retain employees, and make necessary changes to keep their business running smoothly. As the uncertainty of the pandemic continues, employers have had to roll with the punches and make changes to many aspects of their business. One in particular that we have been following are the trends regarding employee compensation. It’s a candidate’s market right now, and compensation demands are on the rise, with employers feeling the pressure to raise wages to compete in the marketplace and battle rising consumer costs.
Over the last couple of years, many workers have reassessed what they are looking for in a job and what type of work/life balance they want. Workers find value in a quality work/life balance, including remote work, more than ever, and employers are having to adjust to this change. Employers can no longer rely on competitive salaries alone to attract and retain talent. Gone are the days of employees being willing to spend eighty hours in the office to make “the big bucks”. Remote work forced upon us during the pandemic has shown employees that mutual flexibility is possible after all. According to Forbes, we can expect to see issues of work/life balance remain top of mind for the foreseeable future.
However, workers who have made work/life balance their priority haven’t forgotten about the importance of compensation all together. We are seeing a rise in pay increases across many businesses, especially those where the demand for talent exceeds the supply. For instance, jobs that have high turnover, or jobs whose compensation has experienced significant inflation. For employers to ensure that they have a shot at retaining good workers, we are seeing an increase in retention bonuses, mid-year salary adjustments, and skill-based pay increases. Employers must also keep in mind that frequent pay increases may lead to the need to raise pay for higher-level positions.
The last compensation trend that we have been following is an improvement to companies’ overall compensation structure. Employers are also facing the challenge of having to hire new employees at a rate higher than current employees, which is requiring them to evaluate their entire pay plans. Companies who are unable to increase pay for employees are finding other ways to retain their employees. Employee benefits, such as childcare, or flexibility to work from home is being valued more than ever.
To summarize, employers should be tuned in to the changing job market and adjust accordingly if they want to stay competitive. Companies should focus on increasing pay for critical positions, improving benefits packages where possible, and work towards adding bonuses and salary adjustments to their financial plans. They also need to keep a close eye on internal equity, or they will face the risk of losing more employees in this “Great Resignation”. There’s no quick or inexpensive solution, but having a strategy is the first step.
If you don’t have a strategy in place to turn the “Great Resignation” into the “Great Retention”, perhaps it’s time to give us a call.