Waging War on Wages
There’s a war on the horizon for corporate America. Not the kind with fighter jets and bullets, but the kind with dollars and cents. Workers are gaining more confidence in the workplace, and as a result, they are demanding better salary and benefits, according to the Emerging Workforce Study (EWS) from recruiting and staffing agency Spherion.
The days where businesses held the upper hand in salary negotiations are fading away. As the American job market improves, employees have the option of seeking alternative employment to get the salaries and benefits they want, so companies that want to retain valuable workers must be willing to sit down at the negotiating table.
“An overarching theme in this year’s Emerging Workforce Study is that today’s employees are more motivated than ever before to seek higher wages,” says Sandy Mazur, division president for Spherion Staffing. “They believe that the growing number of opportunities in the improving job market gives them the upper hand in salary negotiations at their current companies, and if they aren’t happy with the outcome, may seek more money elsewhere.”
In fact, there’s a pretty good chance that some of your employees are already shopping around for better deals.
“Workers have money on their minds and are willing to go to great lengths to get what they want: 26 percent of workers say they will at least explore other job opportunities during the next 12 months,” Mazur says. “While [most of those surveyed] said they would do so simply to test the waters, a similar number of workers cited money, benefits, and earnings potential as the top three factors influencing their decision to stay with their current company.”
The Importance of a Positive Work Environment
Not every company can afford to give huge raises to its labor force. When businesses don’t have the resources to meet the salary demands of employees, they might be able to retain them through other means.
“While money is a primary factor in employees’ decisions, it’s not the only one,” Mazur says. “Employees may find that the grass isn’t always greener on the other side. While another company may offer a more appealing salary, the position details, company culture, and team dynamics may not be as favorable. The EWS found that among non-money factors, workers list location and commute as the top two job-evaluation influencers.”
Money talks, but that doesn’t mean employers should overreach when trying to keep up with the competition.
“It’s important for businesses to be responsible while also remaining competitive,” Mazur explains. “Executives and HR teams should not make rash raise decisions or promise benefits they can’t deliver on simply to keep up with the competition.”
According to Mazur, nearly half (44 percent) of businesses feel that a wage increase would significantly impact their day-to-day operations.
“As much as they’d love to reward their dedicated staff, companies in this situation cannot risk damaging long-term company health or employee morale,” Mazur says. “It’s always going to be a tough conversation anytime an employer has to let a loyal, hard-working employee know that it cannot meet his or her full salary demands at the moment. However, being transparent and honest will make these types of conversations easier.”
In the end, honesty really is the best policy.
But Don’t Be a Cheapskate
There’s a long way in between risking the health of your company and just refusing raises because you don’t want to spend the money. Your employees, who are in the thick of your operation, will be able to tell if you can afford to pay better salaries and just don’t want to.
But these days, most companies are beginning to realize that to retain talent, they are going to have to open their wallets.
“As competition for talent intensifies, companies recognize that they will have to commit more of the overall budget to staffing,” says Mazur. “The EWS found that 71 percent of companies expect the tightening labor market to drive up wages in 2016 after several years of stagnation. In turn, 23 percent list ‘controlling employment costs’ as one of their top HR concerns, up slightly from last year.”
There’s a happy medium somewhere between the bottom line and the top of the profit margin, and smart executives seeking to retain employees will do their best to find it.
“It’s important for HR teams and executives to devise a salary and compensation plan that is both competitive and responsible,” Mazur says. “Businesses should not spend outside of their feasible means to retain and recruit top talent, as important as it is to their overall success.”