How to react to changing economic conditions and employee needs
Cash is still the top compensation consideration for employees and, while benefits and perks remain important, what workers are looking for has changed due to evolving economic conditions and developing needs since the pandemic. In response, employers are reassessing compensation and recruiting strategies, says the ‘2024 Salary Guide’ from Robert Half (RH).
The report says a shifting economy makes it challenging for employers to keep pace with compensation trends. Across major markets, the demand for skilled talent still outpaces the supply of candidates, especially in professions like finance, accounting, and technology. While some employers are taking longer to make hiring decisions, most companies (63 percent) are planning to expand payrolls. That’s good news for the 40 percent of workers across professional fields who say their department is understaffed.
But among managers who want to hire, 92 percent say they face challenges finding and attracting skilled talent. This, along with retention concerns, is prompting hiring managers to stay closely attuned to trends in salaries, benefits and perks, and employees’ preference for flexible work arrangements.
Some key findings of the survey include:
- Cash is still key. Nearly four in 10 (39 percent) workers say their greatest frustration about job hunting is not being offered a pay package in line with expectations, and more than one-third (35 percent) of hiring managers report an uptick in job candidates who ask to negotiate compensation packages. In addition, 35 per cent of workers said they will look for a new job if they don't get a raise.
- Flexible work holds weight. Three in four workers cite flexible work schedules as the top perk they want in a job, and nearly half (49 percent) now feel that a hybrid schedule is the ideal work structure. Separate Robert Half research reveals that six in 10 workers would rather stay in a job with flexible work options than accept a position with higher pay but rigid in-office requirements.
- Companies are poised to pay up for top talent. Ninety-two percent of hiring managers face challenges hiring skilled talent and, as a result, four in 10 employers plan to increase starting salaries in 2024 to attract and keep highly skilled workers. In addition, 39 percent say they are adding new perks and benefits.
- Salary transparency offers a hiring advantage. More than half of hiring managers say including salary information in job postings helps attract qualified candidates (55 percent) and saves time in the interview process (54 percent). Workers also want pay transparency and 63 percent say they would take themselves out of consideration for a role if salary ranges aren't provided upon request.
- Negotiation pitfalls are common. While more workers are negotiating salaries, additional Robert Half research shows that nearly half (47 percent) admit to making a salary negotiation mistake, the most common being accepting too low of a salary for their skills and experience (30 percent).
Complex and complicated market
“We’ve seen a lot of shifts in economic cycles and market conditions over the years and this is probably the most complex and complicated market with so many different headwinds, economic uncertainty, and geopolitical challenges,” says Mike Shekhtman, senior regional director at RH. “Yet there is a low unemployment number and it's keeping even the best economists guessing in terms of where the labour market is heading.”
He says companies are moving the needle when it comes to perks and benefits. Forty percent of employers say they continue to improve their benefits program and this will be integral because employers may not be able to offer salary hikes.
“Many companies had challenges around pay compression, so a lot of them were challenged in a candidate-driven market. Then we saw a lot of change in the market as many people moved on because they knew that the market gave them the opportunity to make substantially more going to a different employer than staying with their current position.
“This did move the needle a lot when it comes to perks and benefits, and this is going to be especially important as we continue to see a potential recession or a soft landing in terms of economic uncertainty. Employers need to be able to get creative.”
Shekhtman says organizations really focused on taking care of their employees when the pandemic hit. HR professionals leaned into caring for employees and saw that work-life balance was critical.
As a result, EAPs, health spending accounts, and wellness became important to a lot of individuals. As companies face more challenging headwinds, they are trying to balance taking care of employees, building a sense of community and culture, and bringing people back to the office, he says.
Ultimately, companies will have to decide whether what employees are asking for comes at the cost of the service levels and stakeholder engagement.
“We need to do a little bit more in terms of understanding what people are truly looking for as to their motivators to make a move. And because different people have different needs, it's going to be very hard to satisfy everybody when it comes to perks and benefits.
“Employers are going to have to get quite creative in how they retain people because there is going to be a more challenging market as we as we move into next year.”