HR Management and retaining employees: employers are increasing salaries to close the wage gap and remain competitive

In the face of what has been called the “Great Resignation”, what can HR Managers, employers and HR Management team do to retain valued employees? As the global pandemic seems to be easing, companies are focusing on getting back to business as usual. But when it comes to retaining talent and attracting new, highly qualified candidates, they are finding that they face tough competition.

• We covered the “Great Resignation” phenomenon here>>

Competitive salary management

One of the areas where companies find that they need to stay competitive is salary management and pay equity.

A recent survey by Robert Half Canada, a management consulting company, has revealed that 69 percent of companies have observed pay compression in the last 12 months. [1]

When this happens, employees who have been on the job for a long time make less money than new hires in a similar position, often ignoring the skills, experience, and seniority that the more tenured staff possess.

 

 

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Do you need help managing your portfolio of valued employees in this competitive job market? Ask the experts at Pivotal>>

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Pay compression and lack of engagement

Pay compression can lead to a lack of engagement and lower productivity from frustrated employees who do not feel that they are adequately valued.

Of the companies surveyed, which included 234 C-suite executives in Canada, 57 percent are taking measures by increasing salaries for their current workers to help close the wage gap versus the new hires coming into the company.

Pay equity is of increasing importance

It is more relevant than ever, as employees today are more and more likely to know their worth, their market value, and what salaries their colleagues are making.

A previous survey from Robert Half found that 53 percent of workers compare notes with colleagues on compensation and that 75 percent feel that they know their worth as employees in terms of salary. [2]

Other findings from surveys used as input for Robert Half’s Salary Guide, in which over 500 employees were polled, show that employees are more than willing to bring the salary discussion to the negotiation table.

 

50 percent of workers plan to ask for a pay increase

50 percent of workers surveyed are planning to ask for a pay increase this year, and 36 percent are willing to look for a job that offers a higher salary if their request is not granted.

Even those employees that would not be willing to leave a job if their raise is denied will largely not accept the answer, with 25 percent saying that they would ask to revisit the salary conversation, and 17 percent stating that they would ask for more perks.

Other compensation benefits to stay competitive

Other compensation benefits beyond salary are another area where companies must strive to stay competitive. And one aspect of compensation that has achieved more relevance in the past years is flexible work arrangements.

As employees have gotten used to working from home during the COVID-19 lockdowns, location and schedule flexibility are something workers are starting to value more. Indeed, 53 percent of those working from home report that they would look for another job if they were required to return to the office full time. [3]

What is clear from these findings is that if companies want to succeed, a critical part of their talent management strategy needs to be offering competitive compensation packages that factor in employees’ lifestyles and the new market value.

NOTES
[1] Salaries and skills>>
[2] Salary Guide>>
[3] Are workers ready to return?