Of course, your company wants to attract the best and brightest employees. But you certainly don’t want to overspend to do it. And that’s just what’s happening in many companies.
Hiring managers are offering candidates, on average, 15% pay raises to join them, according to Gartner Inc.’s 1Q19 Global Talent Monitor.
Only thing? New hires expect just a 10% bump up. So your hiring managers are giving away 50% more money than they have to right off the bat.
But there are other costly consequences as well. As existing staffers get wind of what the new person is making, they start looking for greener pastures themselves. Which saddles you with the costly proposition of even more recruiting thanks to an increase in turnover.
Here’s how you can break the vicious cycle of overspending and still nab the top prospects for the job.
Look internally, tap tech
So now that you know what hiring managers should not be doing, what should they be doing instead? The most obvious way to avoid this whole situation altogether: Hire from within whenever possible.
The benefits are many: Not only do you already know what the person is making and have set salary levels for the promotion, but you’re also showing all employees that you’re committed to their development which is a message that will result in higher retention rates. And that can save you a mint in the long run.
You could also tap technology to help. There’s a range of online tools available that compile salary information.
The website FitSmallBusiness.com recently assessed several of these tools and selected the best. Here’s a sampling of what was found.
- Indeed: The largest job posting site on the Internet Indeed offers an extensive database pulled from job ads, employer info, and worker reports. It’s free, and because it gathers information from so many organizations, it’s especially useful for competitor analysis. However, you cannot download the data.
- BLS Salary Survey: The federal Bureau of Labor Statistics (BLS) is sourced from quarterly national employer surveys. Data can be filtered by any number of criteria – geography, organization size, industry, and job characteristics. The biggest benefit is the ability to download the data in order to be able to fine-tune your analysis using a spreadsheet. It’s also free (although, of course, it’s funded through your tax dollars).
- Salary.com: Salary.com is exclusively employer-reported information purchased from data collectors. Basic service is free, but more extensive analysis ranges from $29.95 for a full report on a single position to data subscriptions that can cost up to $1,200 per year.
- PayScale: PayScale is made up of employee-reported information that’s continually updated as new visitors submit their salary data. The first comparison report is free. After that, pricing is on a case-by-case basis.
- LinkedIn Salary: LinkedIn’s service is comparatively new and uses employee-reported information. It’s easy to see a comparison for other companies and salaries for similar titles. And it’s free to Premium subscribers.
Enter the Employee Value Proposition
Of course, if you want to take a more big picture approach, you’ll want to do what Gartner suggests: Develop your Employee Value Proposition (EVP).
Your company should focus on the categories that both employees and the labor market believe to make for the best working environment, which includes:
- competitive benefits and compensation
- career and development opportunities
- job-interest alignment, and
- work-life balance.
There’s a real bottom-line benefit to having a strong EVP. Your peers who have one not only wind up having to throw less money at new hires to bring them on board, but they’ve decreased their turnover by nearly 70%.