But with a record number of job ads on SEEK in the first half of this year, and a steady decline in application numbers, money looks set to be a more valuable tool in attracting and retaining talent. And candidates and employees are expecting more.
Research for SEEK shows 37% of Australians expect a salary increase this year. This compares to 22% in June 2020. And while only 4% received a promotion last year, 7% now expect their role to be upgraded.
Mark Smith, Managing Director of People2People, says there is a growing understanding among employers that salary increases are required to stay ahead of the competition.
“We haven't seen this major push on salaries for some time,” he says. “More employers understand the cost of having somebody leave is going to be so much more than if they pay them an extra $5,000 or $10,000 to stay. This is especially the case now when the market is so tight for talent.”
Smith says some instances of salary growth in the current market are “through the roof”.
“We’ve seen a recent example of a payroll analyst who was given a $10-per-hour increase by her employer to retain her. That worked out to be about a 20% lift. But she ended up leaving, because she got a 50% pay rise to go elsewhere.”
As an employer or business owner, numbers like this can be confronting – especially given the economic challenges of the past 18 months. But in this current climate, it’s important to start to bring pay and benefits back into consideration where possible.
Time for annual increases?
Wage growth in Australia had slowed even before the economic disruption of COVID-19, but an increasing number of candidates are keen to speed it up.
Benchmarking and annually reviewing salaries can help candidates know that you’re serious about salaries. This is the approach of companies like EY. Elisa Colak, EY Oceania Talent Leader, says the aim is to remain competitive and to invest more in its people where possible.
“Last year, EY didn’t freeze pay or promotions,” she says. “And this year, we did provide pay increases to some of our staff in March and have also brought forward our annual remuneration increase to July.”
Colak says EY participates in annual salary surveys conducted by third-party organisations.
“These surveys provide us with competitive market information that allow us to determine the appropriate range of pay for our jobs and help inform us if our salaries are competitive or not,” she says. “This information is also validated by recruiting data, which tells us what we are paying our recent hires.”
Of course, not all businesses may be able to conduct benchmarking and salary reviews at this level – but there may be ways to review and adjust salaries on a smaller scale. It’s also important to acknowledge that not all businesses will be able to afford pay increases, either. This is where other options are worth considering.
Consider work perks
While salary increases are a growing priority, candidates and employees are willing to consider some extra benefits as a trade-off. For some businesses, this may be a more financially viable way to find or retain staff.
Not all perks need to have a direct financial cost. Increased annual leave (19%) and more flexible working arrangements (17%) are the top benefits people nominate as an alternative to not receiving a boost to their pay packet.
Employers like EY prioritise work perks and promote them as part of an Employee Value Proposition (EVP). In addition to flexible work for all staff, EY offers benefits such as access to psychologist and dietician consultations, financial coaching and access to a wellbeing platform with up to $250 per year to spend on individual wellbeing needs. Employees also receive up to six weeks per year of extra unpaid flex leave and career break leave.
Colak recommends that employers regularly review their benefits program to ensure it remains effective in attracting and retaining talent.
“What is counted as a perk changes over time, so we are constantly reviewing our programs and offers to ensure we are competitive and are what our people want,” she says.
While a full program of benefits may be out of scope for smaller businesses, offering even one or two selected perks or benefits could make a difference when it comes to attracting and retaining employees. You might consider talking to staff about which benefits would be most valuable to them.
As the economy continues its recovery from the pandemic, the salary conversation is coming back into the spotlight. Twice as many candidates would opt for higher remuneration than an opportunity to work less, and fewer than two in five have accepted, or would be willing to accept, a promotion without a pay rise.
The research also shows only a third of candidates are comfortable talking to their boss about a salary increase. With money higher on the candidate agenda, Smith says transparency around pay is even more important in attracting top talent.
He recommends including salary in job ads to set clear expectations from the start – and to save time for both hiring managers and candidates if salary expectations can’t be met.
“Including the salary in a job ad shows candidates that you are transparent and comfortable in talking about salaries,” he says.
“It also shows that you understand that salary is important to candidates, so it should be included in the overall descriptions of a job.”
Salary was once an awkward subject for many candidates, but they’re now more willing to put money on the table. Employees are also expecting a pay rise this year – and current market dynamics are leading more employers to consider salary as an even more powerful attraction and retention tool. It may be time to review your approach to salary and benefits to see where you can keep up with the competition.
Source: Independent research conducted by Nature of behalf of SEEK, interviewing 4800 Australians annually. Published July 2021.