The Future of Leadership/Pay Equity in a Job-Seeker's Market

The current job market is challenging for employers, and while the employment market is cooling for job seekers, they still hold the advantage. To be competitive and attract employees that will help achieve strategic missions, employers are pushed to offer higher salaries to new employees. However, current employees can feel left behind as salaries outpace the typical salary progression for employees. Now employers have to ask how they can help current employees maintain satisfaction in their jobs when the budget won’t allow for raises.

Planning
Before searching for potential candidates to fill a job opening, it is important to create a complete, realistic budget. This allows the company to objectively determine what salary range is affordable to offer a potential hire. While there is no set amount to offer, according to the Society of Human Resource Management, 2021 salaries were approximately 30% to 60% of a company's operating expenses depending on the industry, with the average lying at 44%. With the increase in remote positions available, it is becoming ever more difficult to attract employees in a competitive market since remote flexible jobs receive seven times more applications than in-person roles.

Competitive pay is a large factor in placing a position in the job market considering it may determine how long a position takes to fill. Location, economic conditions, and the number of applicants can drastically change what constitutes competitive pay. Many researchers have proposed solutions to solve the issue. Some businesspeople suggest providing employees with more stock options to increase compensation in place of additional salary, but this dilemma relates to more than just public companies who have that option.

Other Forms of Compensation to Consider
The other issue created in this situation is the inequality of current employees’ salaries to the market-based salaries offered to candidates which are also constricted by budgets. However, the perception of whether the compensation is fair is just as important, if not more, than the amount of compensation itself. This applies to both wages and compensation as a whole. Asking employees for additional compensation ideas is the most effective method to determine the opportunities they would appreciate to increase their compensation satisfaction rather than increasing salaries. Regardless of the approach, ensuring employee compensation satisfaction will increase productivity and limit turnover, and in turn, the need to hire more personnel at competitive rates.

There are a number of ways employers can remain competitive and retain employees that go beyond salary increases and are often less costly. In many cases, non-financial compensation strategies will help employees to feel more valued and as a result, more likely to stay. For example, prioritizing upskilling and reskilling is something that 46% of employers are doing, according to LinkedIn’s 2022 Workplace Learning Report. Offering employees flexible schedules can help employees find the work/life balance that works best for them and may also include a hybrid schedule.

With increasing market salaries, it is important to ensure current employees feel valued even if there is no room in the budget to increase their salaries. Other forms of compensation can help to equalize the perception between the current and potential employees’ salaries to be fairer. This includes many of the ideas listed above. Creating a culture of engaging employees can help employers find solutions that best fit the needs of both parties.