With the job market on a strong rebound after the latest COVID-19 lockdowns and vaccination drive, the basic consideration in job hunting – the salary or hourly rate of a role – has re-emerged again as a top concern for candidates.
Salaries and rates across a range of industries and jobs have significantly increased since 2020, as companies adjust to increased competition for talent. Although some employers are adapting well to changing expectations from candidates, others might need more guidance to understand what the playing field currently looks like.
So, why is competitive pay important? I'll dig into some of the reasons below, and what you can do to ensure you're not missing out on the best candidates in a tight market.
Savvy Employers Are Changing Their Approach to Pay
In recent months, we've noticed a definite shift in employers' attitudes towards salaries for new hires. Clients have conveyed to us their understanding that a competitive salary will be more attractive to candidates and will increase the likelihood of a job offer being accepted.
With this change in approach, I see more job offers coming in with a higher salary or hourly rate than the amount we submitted the candidate at. And the payoff is immediate – candidates have expressed their surprise and happiness when offered a higher figure and have quickly accepted the job. Even a $5,000 bump in pay can make a new hire feel extremely valued.
You could liken these higher pay offers to a sign-on bonus. Designed to entice candidates, sign-on bonuses are lump-sum amounts, or a series of smaller amounts paid to a new hire over the course of a year.
These bonuses are becoming more prevalent as talent shortages get worse in New Zealand and overseas. In the UK, for example, bus drivers are being offered as much as £4,000 to accept a role, whilst bonuses as high as $10,000 are reported in Australia.
Employers' renewed willingness to exceed salary expectations is a refreshing change compared to recent years, when offers were frequently coming in lower than what candidates were expecting. This led to a number of candidates declining job offers, with many stating they had received a higher offer elsewhere.
Top Talent Isn't Afraid to Walk Away Over Salary
Whilst clients are now recognising the importance of leading with their best salary offer, some offers are still coming in below the salary the candidate is expecting.
Unsurprisingly, going too low has a huge impact on the outcome – these offers are typically not accepted by the candidate. In these situations, candidates have expressed to me their disappointment and the feeling that their skills and experience aren't being fairly evaluated.
Offering too low a salary can also make recruitment more expensive overall. Taking more time to fill a position adds operational impacts on the business, whilst hiring someone at a lower rate can create a temptation for them to leave the role as soon as a better-paying opportunity comes up. And, you risk creating negative word-of-mouth about your employer brand, which could make it harder to attract people in the future.
Conversely, the companies offering above the expected salary are adding more sparkle to their value proposition, as candidates who have been offered more will tell their friends and family. In short, the pay you offer can affect your company's image – for better or worse.
Arm Yourself with Data
Market research is essential in this fast-evolving environment, as companies that understand current pay trends will be in a better position to negotiate the right figure with a candidate. We recently reported salary expectations bumping up by as much as $15,000-$20,000 for the same role compared to two years ago, so there is a high risk that some employers' offers are nowhere near the same vicinity as candidates' expectations.
If your organisation appears to be lagging on salary expectations, having the right data equips you for making the business case to your executive team for increasing remuneration for a particular role.
Talking to a recruiter about salary trends can help you get up to speed on current pay data and allow you to benchmark accurately. For an in-depth look at current pay rates, competitive salary examples and the factors currently attracting candidates to jobs in New Zealand, check out our Beyond Recruitment Economic & Labour Report 2021-22.
A competitive pay offer is one of the key candidate attraction strategies available to employers. Companies that are willing to adapt to current market conditions will get the talent they need quickly, so be prepared to offer a bit more during this time. And in this talent-short market, speed is crucial if you wish to avoid losing a candidate to a competitor. Preparing your business with up-to-date salary data will help you move quickly on a job offer when you've found an excellent candidate.
If you need specific advice on making a competitive salary offer or securing the best talent in the market, our team of Technology, Transformation and Digital recruitment specialists can help your business achieve its goals. Get in touch with me to find out more.