Today’s tight labor market is a primary concern for CHROs in terms of labor shortages and inflationary pressures. With the strong economy, there is a broad range of employment opportunities, making hiring and recruiting more competitive than ever. The challenge of finding good people, paying them a competitive wage and not compromising your company’s requirements is prevalent. Since hiring growth has been strong, there is a good possibility that a tightening job market will continue. So, what are the potential challenges HR leadership will have to address in this labor market? Take a look:
When there are talent shortages, the supply of jobs increase. This forces HR leaders to increase wages in order to recruit top talent and retain staff. Wage growth not only occurs in times of low unemployment but also when the economy achieves full employment. When the labor market is fully employed, the demand for workers far outgrows the available supply.
The economic boom happening in Florida is an example of this wage growth. The first three quarters of 2015 had a record number of tourists and domestic travelers visiting the sunshine state. This increase in travel can be correlated to the increase of disposable income, possibly tying back to the wage growth.
To do: When searching for current data that represents wage growth, many executives turn to annual reports and surveys. These tend to be inaccurate because they are not real-time with continuous updates. When evaluating wage growth and how it affects your company, a tool like PeopleTicker allows you to always stay current with market pay rates in real-time.
Your current employees must be committed to your company when available jobs exceed job seekers. Why? Because that means companies are willing to pay more when they are suffering from a talent shortage. 24% of employers report that lack of available applicants is the number one reason that positions aren’t being filled. HR executives need to be able to keep their employees happy and a large part of this includes wage increases.
CHROs need to adjust their strategy accordingly and in addition to wage increases, they should start evaluating unconventional methods. Some of these methods are offering rewards for qualified referrals and recruiting contingent workers. This way, your business can get access to top talent who aren’t even on the job market.
To do: If you are looking for answers on how to determine what to pay current employees or make yourself stand out to applicants, keep up-to-date with current market pay rate data. Relying on outdated salary surveys won’t make the cut. Start looking at tools that give you real-time salary data.
A lack of available talent is causing some employers to be less selective during the hiring process. Jobs that once required specific industry experience are now allowing that requirement to slide.
To do: If you find your business being one of the many hiring candidates from different industries, invest in training to help create a smooth transition. The job switchers are increasing their income at a fast pace, so make sure you are paying them at the right price. Use salary benchmarking tools to ensure you are on target.
The best time for CHROs to begin preparing for a potential future of full employment is now. Taking steps to address and analyze recruitment methods and strategy will allow you to get ahead of your competition. Keeping updated with current market salary rates will allow you to always be in-the-know when it comes to compensating your employees, and will only benefit you in this tight labor market.
Stay on top of your competition with our 5-steps on compensating competitively: