As the national economy continues to expand and the unemployment rate continues to hold at a low 3.9%, economists and other leaders have been waiting to see the final ingredient to a hot job market – rising wages. Well, their wait is over. Earlier this month the Labor Department released data that showed a strong worker wage gain – up 2.9% from the same time last year, the strongest since 2009.
This increase is a strong signal that employers are finally willing to pay more for new talent, and equally important to keep current talent. Employers need to be more flexible in their recruitment and selection process by making it shorter, and potentially relax certain requirements. “Employers have to be more open to let people in they might not have before”, said Manpower Group North America.
Will employers be able to fill all of their jobs? Many authorities suggest no. The continued low unemployment rate suggests that no one is waiting to enter or re-enter the job market – they have already done so. Over 2 million workers have been hired over the past year, but employers need to hire more.
When a tight labor market occurs, employers need to also think about retaining their current employees, especially since they have already invested in them with onboarding, training and development programs. Key ingredients in the retention of workers are:
- Solid onboarding programs
- Strong training, employee development and career pathing programs
- Competitive pay and benefits
If your employees, especially key employees haven’t discussed their pay and the possibility of a raise yet, rest assured its coming. The increase in wages suggests that this has already begun.
What should employers consider:
- Ensure that base pay and other compensation programs are competitive
- Identify through rigor your key employees
- Determine if and when to reward those key employees – before they ask!
The key here is to prepare and have a plan in-place rather than react to an employee’s request. Remember, many good people are already working, and as you recruit good employees from other companies, other companies are doing the same to you. Retaining key talent, especially in a tight labor market must be a key objective for companies. Competitive pay and benefits are key strategies in doing so.