Are employers paying a hefty premium to attract new employees post the Great Resignation? A study by Gartner seems to suggest so. Employees have a better understanding of their needs and are aware of the current depleting talent market that companies are faced with. Better work arrangements, a more balanced work-life as well as ample compensation are some of the demands of the post-pandemic workforce.
Employers understand that the most effective way to pull in new talent, fast, is to pay them more, and that’s exactly what they’re doing. According to a survey by Gartner, 57 per cent of the CEOs plan on increasing funding for compensation, which is already the highest spend category behind digital technology.
As companies begin paying new employees more because of inflation, the same affects the lives of the older employees whose compensation continues to be the same as it was prior to the boom in the market. Companies have offered lump sum bonuses in addition to regular pay adjustments, but the pre-pandemic worker still remains underpaid.
The compensation gap is widening and people are feeling the effects.
Inflation rates aren’t falling and for many, the pay has remained somewhat the same. As we move into 2023, companies are becoming more transparent about pay. 20 per cent of the companies surveyed by Gartner reveal a salary range to their employees, making it more apparent that new hires are getting paid more. This new information seems to be causing internal friction within organisations.
The employees who missed out on this sudden hike in compensation may feel wronged and may disengage from daily work activities, leading to suboptimal performance. Not being adequately remunerated can lead to them quitting as soon as they find better opportunities elsewhere. This may negatively affect the retention rate of these corporations.
A major reason why companies are having to employ new workers at such high rates is also attributed to the low retention rate of the talent they onboard. Companies and CFOs have to work together to create more budget-neutral ways to retain and attract talent.
Sign-on bonuses as well as retention bonuses have been ways considered to be best suited to battle this boom.
Companies are encouraged to place a limit on new hire packages to ensure a reasonable premium switching range as well as extend paid time-off policies, form more remote or hybrid work arrangements and define better career progression opportunities.
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