Every business, from tiny startup to Fortune 500 company, wants to attract and retain the most talented employees possible. In fact, in a recent survey of our customers, we found that “better quality of hire” was the highest priority for the great majority of employers when it comes to hiring. But as with anything of great value, it often comes at a cost.
Sure, there are lots of ways to make your workplace modern and cool—think sit-stand chairs, nap pods, and kombucha on tap. These perks certainly have their appeal, but if you’re really, truly serious about securing world-class employees, the answer may be glaringly simple: offer them a higher salary.
In this blog post, we’ll touch on some salary trends and discuss why high pay is still the gold standard of attracting talent, especially as worker supply plummets.
With Unemployment Low, Raising Wages is a No-Brainer That Isn’t Happening
It’s a candidate’s market, with unemployment at a relative low. According to SHRM, the number of job openings in the US is now greater than the number of unemployed workers, putting pressure on employers to compete for great candidates. With the balance tilted in favor of the job seeker, you would expect them to be able to demand higher wages, leading to a noticeable increase in income over the last year – simple supply and demand. But that isn’t happening.
Instead, wages are surprisingly stagnant. A Los Angeles Times editorial piece contends that this may be the result of companies prioritizing the interests of shareholders – whenever a company announces wage increases for its employees, the share price often plummets, so many companies are reluctant to take that step.
Whatever the reason for the lack of wage growth, it suggests that employers aren’t taking advantage of a fairly obvious way to attract better quality of hire.
Cool Add-Ons Are Fun, But It’s Hard to Beat a Top Salary
For those businesses willing to break off a piece of their profits and put that money back into their employees, good things await. But while workplace improvements like espresso bars and nifty Herman Miller chairs can improve your office’s vibe and boost productivity, they won’t truly help you attract top talent.
But competitive pay can do that. And the more upfront you are about that top pay, the better.
Many job listings are intentionally vague about salary and benefits. If your company is willing to be clear about pay and perks, then you’ll likely encourage top candidates to apply. A recent study from LinkedIn backs up this theory: they used heat mapping to find that job seekers are most interested in the pay and benefits sections of a job posting. And according to research from Glassdoor, pay is the top motivator for 67% of job seekers. That’s why being explicit about these factors in a job description can strongly benefit employers, especially if they are offering a generous compensation package.
Another plus of transparency? You won’t be wasting anyone’s time. Those who know they wouldn’t leave their current job for what you’re offering won’t bother applying, so you can focus solely on recruiting serious candidates.
Even if you don’t want to share salary information upfront, you can still consider being more aggressive with your salary offers during final negotiations. With a tight labor market, candidates may have more than one offer on the table, and if you think you’ve truly found the ideal candidate for the role, you wouldn’t want to lose them if your offer is too low.
Try Baby Steps Toward Better, More Transparent Pay
Many companies are reluctant to implement these high-pay, low-drama hiring tactics, especially when salaries and benefits are often well-kept secrets only mentioned once an offer letter is in hand.
But if you’re trying to attract already-employed talent away from a job they actually like, you might find that transparency yields a stronger applicant pool. After all, why would a happy, well-compensated worker entertain leaving her current post without a guarantee this next job would be even better?
Smaller companies may understandably be a little discouraged at the thought of competing with larger companies in terms of salary. Big companies like Google and Amazon can easily outbid a smaller company for top talent. But remember, while salary is a major consideration for job seekers, it’s just one of many other considerations they take into account, including company culture and work-life balance. Smaller companies can still take advantage of employer branding tactics to stay competitive.
But for companies of any size, if you’ve been struggling with quality of hire, try raising the bar in terms of pay and see how it goes. You might just find your shortlist is more talented and higher quality than ever before.