Since Covid restrictions were relaxed across the UK, companies looking to grow their teams have faced the dual pressures of a lack of available candidates and rapid salary growth.
Figures from ONS, as well as anecdotes of workers in some professions receiving large pay increases – such as lorry drivers – has led professionals to raise their salary expectations, with many becoming dissatisfied with what they are earning compared to rises in other businesses.
To gauge the depth of feeling, a Reed LinkedIn survey asked professionals whether they believed they were paid enough for the work they did. Of the 2,759 respondents, 70% said they weren’t, 22% said they were and 8% didn’t know.
While there will always be those employees who believe they are underpaid, the fact that nearly three-quarters of survey participants believe they aren’t fairly paid, and only one-fifth believe they are, should alarm employers – especially in a talent market where retention is just as critical as attraction.
But just how should you attempt to attract and retain professionals in the current climate – even if your organisation can’t afford to get into a bidding war?
Navigating the current salary climate
The challenge facing companies at present is that the rise in salaries in certain sectors to combat shortages has captured the general mood of the working population. There is also pent-up demand after many professionals took pay cuts or stayed in jobs with lower salaries throughout the pandemic.
This puts businesses in a tough spot, especially as many are still trying to recover from the impact of the pandemic. What can be done? Claire Harvey, Managing Director of Reed’s UK Network, says you need to do your preparation for both attracting and retaining talent:
“With salaries rising, you’re likely to experience both current and prospective employees asking for higher pay. My advice would be to begin benchmarking your salaries versus your competitors, the sector in general and your location.
“Doing this means you are prepared for salary discussions when they arise, and can make informed decisions which allow you to find the sweet spot of what you can afford to pay and what is attractive in your marketplace.”
There are many options available to benchmark salaries by sector and location. Reed’s annual salary guides are one such tool, while our expert consultants can also support you in navigating salary trends in your market.
Once you have benchmarked both existing employees’ salaries and those you are offering for vacancies, act quickly to ensure you don’t miss out on talented professionals.
“While you may think you are saving money by not offering salaries at a market rate, this really isn’t the case,” warns Claire. “In a market where professionals have increased salary expectations, failing to help them get that pay rise or offer them a competitive salary for a new job will see them look elsewhere.”
She adds that reacting to either a resignation or a prospective employee being offered a better salary for another role will be too little, too late:
“Nothing good can come of lowballing professionals in this market. If you wait until a counteroffer to raise a current employee’s salary, even if they accept it, they’ve already taken the decision to leave your organisation once - they’ll do so again in the near future assuming salary wasn’t their only source of unhappiness.
“Similarly, if you only offer a shortlisted candidate the market rate after they’ve received a better offer from another employer, more often than not they’ll choose the organisation which was able to make a satisfactory offer at the first attempt.”
Even in this challenging market, doing your research and being fair to current and prospective employees will ensure you’ll offer attractive compensation packages.
Why benefits should play a big part in your remuneration package
While salaries draw most of the attention when it comes to attraction and retention, benefits play a critical role too. If current and prospective employees’ salary expectations are just that bit more than what you can offer, you may be able to persuade them with an excellent benefits package.
Claire concurs: “When we speak to job seekers about their desired rewards package, we’ve seen an increasing demand for flexibility. This can be for where they work - remote and hybrid working are increasingly benefits candidates are looking for – but also flexibility around the hours they work to help them maintain a better work-life balance.”
If you can offer greater flexibility for current or prospective employees, then they’ll be less concerned about receiving a salary which might not match their initial expectations. You could also use tried-and-trusted benefits like a bonus or generous pension scheme to ensure employees feel financially well-rewarded.
The pandemic has not only driven a desire for flexible working, it also increased the popularity of healthcare benefits. People have naturally paid greater attention to their physical and mental health over the past 18 months, with benefits which support health becoming more appealing.
“Interestingly, a lot more people are quite keen for employers to add healthcare benefits into their package now,” says Claire. “This is not only private healthcare, we’re also seeing more demand for mental health support – particularly in remote or hybrid roles where people may feel more isolated.”
If you aren’t able to match employee salary expectations but can provide some form of healthcare benefits, you’ll not only make your total remuneration package more attractive, you’ll also be demonstrating to professionals that you care about their physical and mental health.
Salaries are on the rise, but that doesn’t mean you need to join in with every bidding war to attract and retain talent. Judicious use of benefits and informed decisions over salary will help you to compete with competitors without exceeding your budget.