In 2023, LaborIQ predicts that companies will need to hire 65 million employees.
However, although many global authorities have experienced unprecedented economic volatility this year, the employment market remains ever-competitive. Not least because employees are more fearful of leaving their jobs during periods of economic uncertainty, making for an increasingly tight labor market.
So, what do employers need to do to secure top talent?
First of all, you need to understand that those who are at the top of their game probably know it. Often, these people have spent years perfecting their craft and being rewarded with adequate pay is the bare minimum. However, prospective talent won't know that you value their skills unless you make it abundantly clear in your job postings.
No, we're not talking about advertising your buy-back holiday pay program or promising a guaranteed team-bonding day out to an aquarium… although that does sound fun. But jokes aside, potential employees need the cash facts right away!
In short, you need to offer competitive compensation and ensure job seekers know about it. McKinsey reports that as many as 30% of employees quit their jobs during the pandemic due to inadequate compensation. This stat alone gives you a sense of how important competitive salaries are for talent retention and acquisition.
But, even more interesting, is that 70% of the global workforce is 'passive talent.' By this, we mean workers who aren't actively seeking employment but are still open to new job prospects. Unlike active job seekers, passive talent is highly critical of companies attempting to recruit them because they're in no hurry to leave their current job.
So, how do you gain favor with this colossal slice of the workforce?
Again, the answer lies in advertising fair, competitive wages. But, to effectively leverage competitive compensation, you need the right tools.
Use Accurate Salary Data
One thing is clear: companies looking to recruit top talent must offer competitive compensation. However, to do this, they'll need to budget accordingly, and with the budget-setting season around the corner, now is the time to act!
But, HR teams can’t budget successfully without adequately understanding the labor market. In this unfortunate event, businesses are more likely to over- or under-invest in salaries and face difficulties as hiring season approaches. This is why HR pros need access to accurate, timely and verifiable salary data to get a sense of the market average for the job roles they're recruiting for.
Yes, free online salary databases are available. However, these aren't always the best quality. Often, this information is outdated and doesn't specify exactly what the job role entails, so you can't be sure if you're comparing apples to apples.
For instance, on Indeed, if we look at the average salary for a construction worker in Virginia, the salary benchmark is $43,036. However, if you examine the actual tax records for this role, you'll see that income is closer to $35,000. That's a considerable difference. This will most likely come down to when the salary data was collected, how it was collected and how it was verified. Unfortunately, free data sources are often anonymous and difficult to attribute, which is why data integrity and validation are crucial for accurate salary benchmarking.
If this sounds like a lot to think about, that’s because it is. Keeping up with the demands of compensation data analysis is a tall order. As we’ve already hinted, there are so many things you have to assess when scrutinizing the viability of a data source that companies quickly become overwhelmed. This leads to errors, misrepresentation and missed opportunities.
Best Practices for Salary Budgets
The only way to manage your HR budget effectively is to have a foolproof strategy for collecting compensation data, which hinges on using salary compensation data from a reliable source. Fortunately, options like LaborIQ can help. LaborIQ provides up-to-date salary information for more than 20,00 job titles by location, industry and company size.
With this in mind, we’ve listed a few best practices for designing your own salary benchmarking process:
- Set salary structures: LaborIQ can help you accurately predict which salary benchmarks will be competitive in your area so that you can set your salary structures accordingly.
- Utilize self-maintained salary answers: With LaborIQ, you have recommended salaries at your fingertips based on validated and updated monthly reports.
- Keep an eye on the labor market: From one centralized place, LaborIQ presents employment and diversity data, workforce trends and recovery forecasts so that you can stay ahead of the curve, and respond and budget your compensation strategy as necessary.
What factors will influence how competitive your compensation strategy is in 2023?
The labor market is nearing an inflection point, and the result will impact compensation growth for all jobs this year. The results will vary by type of job, industry, and location. New talent will become available as layoffs increase, the volume of hiring and voluntary quits will moderate, and the going rate for pay will change. Traditionally salary surveys will be challenged to pick up the differences in this year’s compensation market relative to the past, and you can’t afford to make decisions based on data from the wrong side of the inflection point.
LaborIQ combines current and forecasted economic and labor market trends to give you an advantage in your compensation strategy. LaborIQ’s recommended salaries adjust to the changing environment to make sure you aren’t using last year’s trends when making today’s decisions.