Companies in the U.S. Are Overpaying To Attract New Talent
Compensation remains a top driver to attract and retain talent in the U.S., according to Gartner. While employees only expect about a 10% salary increase to switch employers, companies are offering average compensation increases around 15%.
The latest data from Gartner’s 1Q19 Global Talent Monitor shows that while many U.S. employers continue to extend lucrative compensation offers to persuade workers to switch companies, the premiums to attract talent might not be as high as employers think. “Not only are U.S. employers often paying too much to new workers, but once tenured employees discover discrepancies between their salaries and those of new colleagues, they may be more inclined to look for another position elsewhere,” said Brian Kropp, group vice president in the Gartner HR practice.
Coinciding with employers’ generous compensation offers to attract talent is the rise in the number of U.S. employees actively seeking other employment. Gartner’s 1Q19 Global Talent Monitor reflected that almost 25% of U.S. workers were actively looking for another job, a 7.6% increase from last quarter but still lower than the global average of 27%. The report also found that only 43% of U.S. workers expressed a high intent to stay with their current employers, a slight decrease from 4Q18 but significantly higher than the global average of 33%.
The 1Q19 Global Talent Monitor reflects a slight 2.6% increase in business confidence among U.S. employees from 4Q18, while the global average dropped 1% during the same period. While the recent tariff discussions are not yet impacting business confidence, this is an area for employers to watch.
“Employee perceptions of the economy are primarily driven by how their company is financially performing, and what they gather from news cycles, which can lead to gossip and uncertainty if the employer isn’t actively taking part in this inevitable dialogue,” said Kropp. “Companies need to proactively communicate with their employees about the current business plan and what will keep the organization successful. By leading these conversations, employers can help diffuse any potential workplace issues that might lead valuable talent to go elsewhere.”
As the U.S. labor market remains tight with unemployment near all-time lows and more job openings than job seekers, employers need to ensure they are engaging their workers, by acknowledging hard work and accomplishments and delivering the rewards that are most prized. To establish the best chances for workplace success, Gartner recommends companies develop a strong Employee Value Proposition (EVP) that concentrates on key categories that employees and the labor market identify as valuable when working for an organization, including competitive benefits and compensation, career and development opportunities, job-interest alignment and work-life balance.