Unemployment rates are low. There is a talent shortage. Still, some employees may not realize how much negotiating power they have in regard to compensation.
While 55 percent of hiring managers say it was difficult finding qualified candidates a year ago, 81 percent say that it was just as difficult, or more so, today, according to this year’s Employment Dynamics and Growth Expectations (EDGE) Report. But while the balance of power has shifted to favor highly skilled workers, the majority of employees surveyed said they are still feeling cautious about the job market and not very willing to negotiate higher salaries.
The survey and report were developed by Robert Half International (RHI), the world’s largest specialized staffing firm, and CareerBuilder.com, the United States’ largest online job site. The survey, which included responses from more than 1,000 hiring managers and 3,000 workers, was conducted to determine which group has more clout in the current job market.
“There is an increasing talent shortage that hiring managers are keenly aware of, but that reality is not on the radar screen of job seekers,” says Steve Kass, president of the Great Plains District of Robert Half International in Chicago.
Smart Business spoke with Kass about this curious discrepancy, and what it means for both workers and employers.
Could you explain the reason for the talent shortage?
With unemployment rates at around 5 percent, the country is basically at full employment and there’s a more shallow talent pool to draw from. The talent shortage is particularly acute in the fields of accounting, finance and information technology.
There is an increased need for accounting, auditing and finance professionals because of the stricter corporate governance created by the Sarbanes-Oxley Act. These regulations have created accounting jobs that did not exist just five years ago, and has led to a demand by employers to find highly skilled employees to fill staff-level positions. In the information technology sector, companies are increasingly faced with a large number of baby boomers retiring and smaller generations of replacement workers entering the work force.
If jobs are plentiful, why are workers being cautious when taking a new job? And why are they hesitant to ask for more money?
Although the job market is currently in the employees’ favor, our report indicates that 74 percent of those surveyed are not looking for a new job. One reason is because the layoffs and workplace uncertainty from a few years ago are still fresh in people’s minds, and many employees are hesitant to test the job market when they have the security of a job. Another reason may be the perception of the economy.
If you look at the facts, you can see that the job market — and the economy — is strong. But if you turn on the news, there’s a lot of negativity and bad news. So, as a result, people make that leap and assume that the economy is bad. But it’s not. It fact, the economy is actually doing tremendously well.
What should workers do in this environment?
The survey showed that employees are hesitant to push for more money even when employers are open to paying more money. While 45 percent of the workers surveyed said their compensation had increased in the last year, only a small percentage are willing to ask for more money in the future. Job seekers with in-demand skills have much more leverage than they think they do, and they need to try and use that leverage to increase their compensation and benefits packages.
What does this all mean for companies that are hiring?
It means that the market is more competitive than it has been in the past. Businesses need to be more open to paying more money, particularly when they find the right candidate. They also need to focus on retention strategies. Employers are becoming worried about turnover, and it is important to step up retention efforts, especially since 21 percent of hiring managers in the survey reported that turnover was higher than last year at this time.
What are actions surveyed companies taking to increase staff retention rates?
Thirty percent of hiring managers reported their firms have put in place new policies and programs to increase staff retention rates in the last 12 months, up from 23 percent this time last year. The primary measures taken included offering pay raises, bonuses, better benefits and more flexible schedules. This is a wise step considering the competitive hiring environment at the moment. The key is for employers to make sure their employees feel valued.
STEVE KASS is the president of the Great Plains District of Robert Half International in Chicago. Reach Kass at (312) 616-8200 or [email protected].
