Market Conditions – How to gain a competitive advantage in the current tight labor market.
Our tight labor market leaves employers feeling even more concerned about their #1 worry — finding top talent. If you want to be the first to quickly attract top talent, your game plan starts here.
Understand The Market
The historic talent shortage continues and employers are competing with a talent pool that looks much different than pre-2020. Organizations need to be relevant in the market by understanding the basics of the employment market.
High Job Openings and Low Supply of Candidates. The number of jobs in the market outpaces the number of employees looking for work by almost double.
The historically low unemployment rate of 3.8%; a very sharp drop from 6% in April 2021 – less than a year ago.
Wages and benefits increased 7.5% in 2021. This is the biggest increase in over 20 years.
The Great Resignation. Millions of employees are leaving their jobs to find more flexible employment, work with a company that has a better corporate culture and pay, or leave the workforce altogether. Workers agree that there is a mismatch between what workers want and what employers are willing to provide.
Expect movement. A modern career path has value when experience comes from several diverse companies and experiences. It’s no longer taboo to have had strategic jumps from one employer to another.
Plan For Pay Increases To Stay Competitive
Historical increases force all businesses to re-look at their labor cost projections. In past years, an employer could plan to offer at-market salaries to new hires and raises of 2 or 3 percent to keep pace with inflation. That’s no longer the case: Hiring managers now find they have to offer more to attract the job candidates they need, particularly for sought-after technical skills.
✅ Rework budgets to account for highly competitive pay in the current market. For highly-sought-after niche roles and locations, competitive pay may not apply here. There is an acute shortage of personnel for these roles. In some cases pay is $30k-$60K, well beyond the market.
📌 Firms plan for highest raises since the Great Recession Annual growth and salary increases are back to the 2000 level. For the last 12 years, pay has been stagnating. Your competitors are strategically planning for pay increases. If you are not paying your employees competitively, they will be easily persuaded to work elsewhere.
📌 How To Handle the Replacement of a Long-Term Employee. If a seat has been filled in your company for many years, not only should you evaluate the market pay rate, but also consider the workload. Many employees who have filled a role for 10 or more years have most likely absorbed the job of more than two people over the years and they are grandfathered into a lower pay rate. In this case, reevaluating pay and how the work can be divided up is required. Employers must get creative and explore how they can split up the job into two roles; for a better likelihood of finding two great candidates instead of a needle in a haystack.
Offer Modern And Highly Sought After Benefits
Things like medical, dental, and 401K are expected and standard. They won’t raise eyebrows. Offering flexibility and autonomy is the #1 reason for job satisfaction—according to many experts. This modern benefit comes with a “low-cost, high reward”. Employees also want a company that practices reasonable work-life balance, a corporate culture of empathy, inclusion, career growth, and fun.
✅ Hear our recruiters talk about this and more benefits that can position your company as a top company to work for.
📌 Ultra-low Offers To Prospective Candidates Are Risky Low offers have rippling effects. Here are good reasons to start things off on the right foot …with a great offer.
• When a candidate rejects a low offer, you are back to square one and have to start the search all over…increasing your hiring expenditures. The cost for your organization to review, consider, and interview candidates have risen in recent years and it’s smart to get it right the first time.
• It’s difficult to attract top talent when you have a reputation for not making strong offers, If you practice what you preach and sell a solid company culture but make very low offers, candidates will see this tactic as “playing games”; they will run for the hills and post their experience about your company online. Word travels fast in the digital world and when people feel like they are not taken seriously and their worth is not acknowledged, they let it be known on social channels, Google reviews, Glassdoor, Indeed, Ziprecruiter, local networking, and in person.
• Candidates may initially take your offer because they, too, have engaged in a good amount of time in the interview process and need to get working. However, these candidates are also likely to move on in the short run and will continue to take interviews with other companies. They will jump ship for a better offer — leaving you with unfinished projects, late deliverables, and additional recruiting costs. Optimal opportunities will pass by because human capital was not managed properly.
• Look at the big picture. Solidifying the candidate for the long term is the primary and most important goal. People are the company’s biggest asset. When a fair offer is made, both parties walk away as winners for the long term and business will thrive.
It’s a fact, many of your employees are thinking about making a change and looking at opportunities outside of your company. Don’t take it personally. Do all you can to mitigate their departure and plan for more frequent replacements, especially in 2022.
Know What Your Pay Benchmarks Should Look Like
Knowing and understanding the current market conditions means you will need more than a Google auto-generated salary guide. Pay increases have moved at a quick pace and a simple Google search based on AI and PAST pay rates is already outdated. You will need a salary guide that not only takes into consideration past salaries but also accounts for the current market and keeps you uber-competitive. Our salary guide will provide the information that you need for salary projections that attract top talent and maintain the satisfaction of current employees.