Extraordinary Employee Incentives Still in Play in Today's Labor Market
While some segments of the U.S. labor force have started to eliminate positions amid labor market and economic instability, a recent survey indicates competition for top talent is still fierce as 80% of companies are taking steps to make hiring easier. According to a new study from The Harris Poll commissioned by Express Employment Professionals:
- Four in five U.S. hiring decision-makers (80%) say their company is taking steps to make hiring easier – including offering higher starting salaries (33%) and hiring bonuses (29%).
- More than a quarter (27%) report they are offering remote work and/or offering better benefits (e.g., more paid time off, flexible hours, etc.).
- Around 1 in 5 (21%) say their company is expanding the geographic areas where they advertise open positions (e.g., other cities, states, etc.), offering more internships (19%), and/or reducing qualification criteria for open jobs (19%).
- Nearly three in four (71%) of businesses reported they have modified benefits in the hopes of retaining current employees or attracting new ones.
- Three in 10 (32%) say they have increased the amount of paid time off offered to employees, increased the amount of sick leave offered (31%), and/or offered additional healthcare incentives, such as a gym membership or mental health resources (28%).
However, despite the strides companies are making to compensate workers, delivering on all employees’ compensation expectations can be complicated.
Roughly 71% of U.S. hiring decision-makers say it is impossible for them to offer all of the benefits that employees want now – a sentiment that has held steady since 2021 (69% both in the first and second half of 2021).
In line with these sentiments, approximately 3 in 10 (31%) say their company has experienced an increase in employee turnover so far this year resulting from better pay/benefits being offered elsewhere. Twenty-six percent of employers reported better perks being offered elsewhere as a contributing factor to higher turnover (e.g., summer Fridays and unlimited vacation days).
Companies reported that their lack of competitive pay (16%) and/or benefits (16%) are among the biggest hiring challenges they will face over the next year.
In Florida, Express franchise owner Mike Brady said the only employee incentive he’s noticed decrease is hiring bonuses. “This is the only small change I have seen in our market,” he said. “Despite that, there are still many jobs out there to choose from for job seekers and those ready to make a change. It’s still a job-seekers’ market!”
A majority of candidates accept positions because of pay or incentives, which is why companies are keeping pay rates at historic highs along with other benefit offerings, said Georgia Express franchise owner John Culpepper. “Recession is inevitable, but unlike previous ones, a low labor force participation rate, low unemployment, and the rising cost of goods have left job openings extraordinarily high. Companies must differentiate themselves and attract talent by using compensation incentives.”
Company culture’s role in recruiting and retention
With the high demand for wage increases and other perks, companies are struggling to keep up with costs and are starting to evaluate the quality of some hires.
“I have had several business owners who tell me they do not want to pay more for less qualified talent, work ethic, and experience,” Brady said.
Beyond pay scale, Culpepper contends, a healthy company culture and community reputation are what attracts workers and makes them stay. “Strong ‘employee-first’ companies have been shown to withstand the challenges of today’s market,” he said. “These companies find that they do not have to increase pay and benefits to attract and retain. While this sounds simple, it’s not. It has to be genuine and from the C-suite down.”
Labor market predictions
Looking 6 months down the road, neither Culpepper and Brady anticipate much shift in the tight labor market.
“I’m concerned about the escalating costs from inflation and the need for workers to make more to keep up,” said Brady. “The rising costs will cause businesses to hit a breaking point. What the impact will be as a result is a guessing game.”
Culpepper said that if market conditions shift to a recession with slower business demand, the outcome will force a change in employee tenure. “Employees are currently treating our market like a buffet, opting to go to and from companies at their leisure because they know it will always be there,” he said.
“Once access is limited, employees will pile more on their plate – stay longer – for fear of depletion. This does not change who the employee is or their work ethic; it just forces commitment. Great companies with employee-focused cultures are ‘reservation only’ exclusive dining, attracting the most favorable ‘taste buds.’”
Investing in quality employees who bring value to the table is imperative to the success of any company, said Express Employment International CEO Bill Stoller. “Not all businesses can offer everything job seekers desire for employment, but often, reasonable pay and benefits coupled with a healthy work environment will attract the right workers at the right time.”
The survey was conducted online within the U.S. by The Harris Poll on behalf of Express Employment Professionals between May 3 and May 23, 2022, among 1,003 U.S. hiring decision-makers (defined as adults ages 18+ in the U.S. who are employed full-time or self-employed, work at companies with more than one employee, and have full/significant involvement in hiring decisions at their company). Data were weighted where necessary by company size to bring them into line with their actual proportions in the population.
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