Minimum wage continues to climb for many states throughout the country and Congress is expected to vote later this summer on increasing the federal minimum wage to $15 per hour. More states and municipalities have already begun the process of instituting a $15 minimum wage, could this be hurting small business owners in the quest for talent?
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While businesses of all sizes may scoff at paying workers $15 an hour, it’s the small business owners who really have something to complain about. Unlike giant corporations, like Walmart and McDonald’s, paying workers such a high wage may be eating into small business’ bottom line. In light of this, we were wondering: Are you going broke trying to attract and retain talent?
Jobseekers Don’t Expect What Employers Actually Offer
According to a new Gartner survey, some companies may actually be going broke! The survey found that when employees switch jobs; they expect at 10% pay increase, but new employers are actually paying them 15% more. Gartner suggests that employers don’t need to go through such great lengths to attract talent, but we’re sure employees would disagree.
“Not only are U.S. employers often paying too much to new workers, but once tenured employees discover discrepancies between their salaries and those of new colleagues, they may be more inclined to look for another position elsewhere,” says Brian Kropp, Group Vice President of the Gartner HR practice—in a press release.
Gartner’s “1Q19 Global Talent Monitor” also found that almost 25% of U.S. workers were actively looking for another job, a 7.6% increase from last quarter but still lower than the global average of 27%. According to the report, only 43% of U.S. workers expressed a high intent to stay with their current employers, a slight decrease from a different Gartner report, but significantly higher than the global average of 33%.
If you’re offering new hires 15% more when he or she is only expecting 10%, that’s a great retention strategy … for the newly hired employee, not necessarily your entire workforce. Gartner offers a few strategies to help you attract and retain talent without breaking the bank.
Cheaper Alternatives
According to Gartner, employers need to ensure they are engaging their workers, by acknowledging hard work and accomplishments and delivering the rewards that are most prized. This is a great way to retain your current workforce, and it will also show jobseekers that you care about your employees’ contributions.
To establish the best chances for workplace success, Gartner recommends companies develop a strong Employee Value Proposition (EVP) that concentrates on key categories that employees and the labor market identify as valuable when working for an organization. These include competitive benefits and compensation, career and development opportunities, job-interest alignment, and work/life balance.
“When companies invest and deliver a strong EVP, engagement levels in their workforce will likely see a boost — not only in the ability to retain talent, but also in attracting sought-after talent,” Kropp adds. “In this hypercompetitive U.S. labor market, organizations with attractive EVPs can reduce the compensation premium needed to attract qualified candidates as well as potentially decrease annual employee turnover by just under 70%, all of which helps the company’s bottom line and brand reputation.”
Global Talent Monitor data is drawn from the larger Gartner Global Labor Market Survey that is sourced from more than 40,000 employees in 40 countries. The survey is conducted quarterly and is reflective of market conditions during the quarter preceding publication.