By: Karen Waldrop, CSC
National Vice President of Workforce Solutions
The job market is tight — there’s no denying that. And as it continues to tighten, employers must look for new ways to compete for top talent. They’ll also need to find strategies to retain their best team members.
Of all the options, the area that everyone seems to agree on is pay. In fact, the average worker is now seeing a wage increase of roughly 3 percent. Those with skills in high demand and short supply have received higher increases. For example, compensation increased by 4.8 percent for information technology and 3.5 percent for sales and service occupations.
While relatively small and often on par with the average pay increase, wage growth matters. If your company’s salaries have remained stagnant, you may find yourself increasing pay at a much higher rate just to catch up, especially when you consider that top talent will be off the market in just 10 days. You need to be competitive to attract and retain top talent.
All Things Equal
The first step includes a little due diligence: Conduct some market research, review the roles and their responsibilities in the company, check the Bureau of Labor Statistics to determine the average pay, etc. You can also contact our team to receive a custom salary guide, specific to your industry, location, and existing position(s).
If you do find your salary structure isn’t in line with industry standards, or if you’ve skipped pay increases for the past few years, the question then is, how exactly do you make your wages fair and equitable? And how do you ensure this situation doesn’t happen again?
1. Evaluate all disparities.
Sometimes, there are legitimate reasons why workers are paid differently for the same role. So, ask yourself whether there’s any validity to any disparity. For one, do people in the same role have different educations or certifications? Do they bring different skill sets or experience to the table?
Also, are there any differences in employee attitudes? What about their responsibilities? Though they share the same title, the role may not actually be identical. Beyond that, is the person a true asset to the company? If someone does no more or less than what’s required, the pay disparity may have merit.
Related: Top 5 Tips to Setting Competitive Salaries to Attract and Retain Talent
2. Correct inequities incrementally.
The most obvious way to bring salaries in line with the market — or other employees, for that matter — is to give pay increases where necessary. If, however, your budget doesn’t allow it, you may need to establish a compensation plan where you offer incremental increases over a period of time.
The approach will vary, but companies have been known to give lower-paid employees a pay raise every six months until their salaries fall within industry standards. If you go this route, make sure to explain the compensation structure and ultimate goal. Transparency is key.
3. Set earnings expectations.
New hires often know exactly what’s expected of them prior to day one. But are you doing the same with the requirements for a raise or promotion? Stipulating what’s necessary also creates guidelines for leadership, ensuring consistency with raises and promotions over time.
4. Rethink promotion practices.
Pay disparities can often result from internal promotion practices. When promoting an employee, chances are good that the new role only comes with an average bump in pay. A better practice is to treat promotions like outside hires, offering a salary more in line with industry standards.
5. Stop factoring in past pay.
Using an applicant’s salary history when making an offer is a recipe for pay inequities. Instead, make offers according to the job and its responsibilities. Sure, we all want to save a buck, but what someone was earning at his or her last job has no real bearing on your salary structure.
6. Make negotiating the norm.
Many companies bristle at the idea of employees asking for a raise outside their annual review. But the request actually can serve a dual purpose: making employers aware of pay inequities and potential talent attrition before either can become serious problems. Abide by the open door policy.
7. Conduct compensation assessments.
A compensation assessment is just as it sounds, a review of salary practices. The goal here is to find and fix issues before they worsen beyond what’s manageable. The Society of Human Resource Management recommends conducting compensation assessments at least every three to five years.
8. Explore other options.
Some companies are finding, even after making pay equitable, that higher wages are no longer enough. You may need to get creative with your compensation packages. Look into offering additional benefits, like paid parental leave, flextime, student loan forgiveness, etc.
To ensure your compensation packages are keeping pace with the competition, again, please feel free to contact us about our custom salary guides. We can also be of assistance in finding qualified candidates for any vacancy. Just let us know what you’re looking for, and we’ll provide a pool of talent with the desired qualities, qualifications, and experience.