In compiling data for our highly anticipated 2017 Salary Guide, we found some interesting trends and information about what to anticipate in the coming year.
We saw this phenomenon in 2016 and will continue to see it into next year: a candidate-driven market. According to Glassdoor, 90% of recruiters agree that the market is in the candidates’ favor. Top candidates will be tougher to attract. These individuals may have multiple offers with salary rates at or above your market’s average. You need to be focused on effective recruiting methods and building your employer brand to stand out in the crowd.
Furthermore, a candidate-driven market creates a situation in which your employees– who may or may not be looking for a new job–could be lured away by the competition. A survey by Willis Towers Watson states 3 in 10 employees say they are likely to leave their employer within the next two years. Jobseekers, both active and passive, are willing to make a move for the right offer. Now is the time to take a look at your workforce and ensure you’re doing everything possible to retain your top people, including fair pay and engaging opportunities.
Where does salary fit into all this? The modern workplace is changing, but even as culture becomes a focal point, salary will continue to serve as a fundamental factor in employee satisfaction. Employees’ basic needs–fair pay, benefits, and reasonable working conditions–must be met before they can enjoy your organization’s personality and perks. To ensure attraction and retention of top performers, the winning combination of outstanding culture and competitive salary will be crucial in 2017.
Pay is Up
While the cost of living adjusted forecast for 2017 is predicted to be small at 0.2% (AARP), that does not mean pay raises will be minimal in the upcoming year. Employers are budgeting to increase salaries beyond a mere cost-of-living increase in order to reward their best employees and to lure top performers away from competitors.
At Ultimate Staffing, we’ve seen salaries rise higher year over year than they did from 2015 to 2016–especially in secondary markets where the tightened labor market has caught up with pay rates.
Nationwide, most markets will experience an increase of 3% in both professional and entry-level position salaries. Markets that saw slow growth in 2016 will catch up and may see pay rates increase by as much as 5% in 2017.
The tight labor market is mandating that employers offer the most competitive pay for professional level positions. Meanwhile, the minimum wage increases initiated in several states recently have caused entry-level position pay rates to increase in order to be competitive in attracting the best talent.
For Current Employees…
More than half of U.S. employers (57%) said hiring activity has increased over the past 12 months, while turnover has picked up by 37% over the past 12 months (Willis Towers Watson). With demand high and available talent low, your employees are top targets. In addition, only 15% of employees are truly satisfied in their job and aren’t looking for other opportunities (LinkedIn). That means 85% of your employees are at risk of leaving your organization.
When it comes to keeping your best employees onboard, be proactive. Review your department budget(s) and be keenly aware of which employees are vital to the success of your team or company.
It is more cost-effective to keep those employees in place than to try and fill their position. Review salary data with your staffing partner or recruiter and make sure your top performers are rewarded with competitive salary.
The average raise a good employee can typically expect in 2017 is about 2-3%. Meanwhile, employers who have adopted a performance-based pay structure plan to increase salaries of top performers by 5-10% to aid with retention. Keep this in mind, employees with successful track records can typically find an opportunity that pays them about 10% more.
As you propose your salary adjustments with retention in mind, remember that salary is important, but won’t keep an employee from leaving. Get salary right and then make sure you are excelling in the other areas of employee engagement.
Your top performers won’t be satisfied with a simple cost of living adjustment. According to Glassdoor, 35% of employees will start looking for a job if they don’t receive a pay raise in the next 12 months. And your competition is keeping an eye on them. Combat this with performance based bonuses.
Every organization has a salary budget for its employees. According to SHRM, when a low performer receives even a token incentive payout, it takes money away from payouts for those employees who are driving organizational performance. Bonuses rooted in performance can create a rewarding system of fairness and recognition, keeping your top performers engaged and rewarded.
Make these programs available for all, so lower performers won’t feel left out. Besides, you may be surprised who rises to the occasion. Everyone should be accountable and eligible.
As employees work towards these goals, provide abundant recognition and feedback. A lack of acknowledgment has a direct impact on productivity: 50% of employees who don’t feel valued plan to look for another job within the next year (Huffington Post). And a study by KRC Research discovered 6 in 10 employed Americans say they are more motivated by recognition than they are money. The combination of recognition and money will aid in retention.
Passive candidates require competitive offerings
Your best candidates may be the ones who aren’t looking for a new job at all. “Passive” candidates or “noncandidates”– the ones who aren’t actively looking–are attractive mainly due to their up-to-date experience. They are also 120% more likely to want to make an impact and 33% more likely to want more challenging work (Undercover Recruiter).
But how will you find them? They likely won’t be looking at job boards, and if they are, they won’t want to go through lengthy application procedures. Work with your staffing partner to diversify your approach, while emphasizing social media and incentivizing referrals from current employees.
When luring in outside talent, salary is expected to be on the higher side of average rates. When attracting passive candidates, salary is expected to be even higher. According to Indeed, 32% of passive candidates expect a salary increase of more than 15% if approached by recruiters.
The perks and environment your organization can offer are more powerful than you think: 84% of candidates would consider leaving their current company if another company with an excellent reputation offered them a job (Glassdoor). Meanwhile, 69% would not take a job with a company that had a bad reputation, even if they were unemployed! Build your employer brand online and across social media to create a clear picture of what it’s like to work for your organization.
When a top performer prepares to leave an organization, they will likely receive a counter-offer from that organization. And often, you won’t be the only organization a candidate may be interviewing with. Make sure your job offer is more powerful–that means competitive salary plus a clear picture of how they will be engaged.
Move your hiring process along quickly and give candidates 24 hours to respond to the offer. Have your counter-offer on hand and ready to go.
Actively address these throughout the interview process and reiterate them along with your counter offer. Discuss career paths and growth opportunities, future projects, and organizational happenings,then relate them to the candidate. Demonstrate how you are invested in them.
Just be yourself: Remember to be realistic about what your workplace is actually like on a daily basis. Your workplace is not meant for everyone and that’s okay.
For example, “I remember you said that you have a dog. Our extended lunches are perfect for pet owners, as many of our employees use that time to go home and check on their animals. Then on Fridays everyone brings their dog to work with them. We’d love to welcome your dog to the team.”
It’s personal touches like this that will capture their attention and strengthen your counter-offer.
The most important thing you can do in 2017 and beyond is maintain high levels of engagement for both tenured and new employees. Money is important to all employees, so being proactive with salary adjustments will keep them engaged on the most basic level. To truly nurture employees and encourage retention, you must invest in culture and workplace practices. Consistently reiterate your best practices to your employees and ensure that they are involved in the process of building and championing your workplace culture.
Take a proactive approach with monetary and cultural practices and your organization will rock 2017.