With the current hiring climate, many hiring managers are saying it’s harder than ever to hire the right talent. And by right talent, we mean people with the right skills and at the right price. Research shows the average job vacancy is around 26.1 working days, a problem typically blamed on the lack of available talent. Many companies’ approach to compensation hasn’t evolved and is ineffective in today’s rapidly changing talent market, which has become a large obstacle in recruiting the right-priced candidates.
Why is it so important?
After figuring out the skill set that a prospective employee brings with him or her, deciding what to pay them can be confusing. If your company doesn’t already have an existing pay scale in place, you may find yourself doing some research. The old adage, ‘if you want monkeys, pay peanuts,’ has rightfully earned a spot in recruiting and hiring employees. If employees aren’t properly compensated, your business may face loyalty issues, low retention rates and decreased productivity.
While the newer generation of workers greatly values feedback and non-compensation benefits, pay is still the number three contributor to overall job satisfaction. In fact, employee pay could be what sets you apart from the competition since 62% of U.S. workers say that ‘better-than-average’ pay is a leading workplace differentiator.
Factors Affecting the Cost of Talent
Historically, compensation models have been shielded with secrecy and the employer held all the cards. However, the changing workforce and increased competition for qualified talent has left companies unprepared and off balance. What exactly has caused such a disruption in the price for talent?
● Specialization of jobs. With technology advancing and the evolution of “micro-industries,” there are several jobs being created that didn’t exist before. This makes it harder to compare candidates in the market when there is such a small sample size of people who have the same qualifications.
● Talent market transcending in multiple industries. In the past, only large technology companies like IBM, Microsoft or Oracle hired software engineers. Now, software engineer jobs are just about anywhere, from financial services to aerospace and energy companies. Everyone is competing for similar talent.
● Candidates are more informed than ever. Thanks to social media and the internet, candidates have come to know their worth. The more Millennials we see entering the workforce, the more transparency is expected from management. This desired transparency means employers need to be prepared to back up their compensation offers with real compensation data.
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How do you know you are paying the right price?
Determining fair compensation requires some research and a tool that can do the work for you. It is important to compare apples to apples when looking at compensation; what are competitors paying for a similar job? This becomes more difficult when trying to determine a “market rate.” Some criteria to follow when looking at compensation and right-priced talent:
● Budget. How much can you afford to pay a potential employee? It’s key to take long-term implications into consideration when determining this. Will you be able to afford future bonuses and pay hikes?
● Job descriptions. Having defined roles within the company allows you to evaluate an employee’s responsibility. If someone has the skill-set and ability to do the job of two
workers, paying that person extra would be worth it. If you have a small budget, consider offering flex-time or other benefits that could offset the lower salary.
● Staffing correctly. Make sure that you are only hiring the staff you need. With jobs that offer many redundancies, consider hiring part-time or temporary employees to avoid burnout. Over staffing eats up your budget and will take away the ability to recruit the right-priced talent.
After determining these things, it’s time to dig in and do your research on what to pay for the right talent. In today’s competitive economy, real-time salary comparison data is vital to maintaining costs and managing labor pools. PeopleTicker does all of the work for you by offering real-time data on the current job market and fluctuations in the supply and demand of talent. Learn more about how we do the research for you here.
Is the Netflix Recruitment Model right for you? Find out here.
Determining compensation and recruiting the right-priced talent is one of the most complex aspects of the hiring process. The largest driver of compensation is not the job title, rather the skills, capabilities and achievements that a candidate possesses to perform a specific job. Employers now need precise data to be able to recruit and retain the right talent. Take a look at real-time compensation data and when you do find the right person, you’ll know exactly how much they should be paid at the time of the offer being made.
Practice smart negotiating with this printable below: