Over the past 40 years, U.S. workers have experienced slow and uneven wage growth. Add to this an extremely tight labor market along with unexpected spikes in inflation and it’s not hard to see why we are experiencing a disgruntled labor market that has people saying “adios” to their employer.
Welcome to “The Great Resignation.” One of the easiest ways for an employee to take advantage of the current market situation and remedy any imbalance in income or dissatisfaction they have with their current role is to seek a position with a new company. However, employers are desperate to attract top talent and retain their current workforce and are looking to do this through both monetary and non-monetary incentives.
According to The Conference Board, a global independent business membership and research association, employers have set aside an average of 3.9 percent of total payroll for raises in 2022. However, this in no way guarantees that companies will be issuing raises across the board.
For the employee and employer: Prepare for your compensation discussion. As the hiring manager, understand what is motivating your employee to ask for a raise. The employee may be overworked as a result of a colleague’s resignation coupled with the workforce shortage. It also could be that the employees’ salary is below the market average for location and position. Understanding the “why” will help in reaching a win-win situation.
As the employee, be mindful of the timing when you approach your manager. If the company isn’t doing well, has recently gone through layoffs, or instituted a hiring freeze, then a request for a raise may not be feasible. However, there may be other non-monetary incentives that can be considered. Additionally, consider your performance. If you’ve had poor or average performance reviews, this is likely not the best time to ask for a raise but is a great opportunity to ask for additional training and guidance to help you perform at your best.
For the employee: Make your case. Focus on why you deserve the raise, not on why you need one. Avoid talking about personal expenses or comparing yourself to a co-worker. Instead, detail your accomplishments and contributions to the company. Set up a meeting with your supervisor and discuss your accomplishments, how the company benefited and what the loss would be to the organization if you were no longer part of the team. Also, talk about your future goals and desired growth with the company.
For the employer: Have a contingency plan. Ideally, as the hiring manager, you will be able to offer a compensation increase. We’re currently facing a very tight job market with millions of Americans quitting their jobs every month, and it can take three to six months to fill positions, a significant cost to the company. However, if you’re not able to offer a monetary increase, there are a lot of non-monetary or longer term items you can offer. Be ready with a contingency plan to retain key talent.
If you’re unable to offer a salary increase, consider some other one-time or long-term monetary incentives such as a retention bonus, stock or stock options. You could also offer non-monetary incentives such as working remotely, four-day workweeks, flexible schedules, enhanced corporate title, more vacation time or an increase in contributions to the company’s retirement plans. You could also offer additional training or specialty certification. Some other creative options include student loan repayment, enhanced paid sick and family leave, or child- or senior-care benefits. Knowing what motivates and drives the employee is key here.
This is currently a very competitive labor market. Retaining key employees and attracting new talent are top priorities. As an employee, speak up, know your options and understand what motivates you to do a great job. As a hiring manager, recognize your key employees and what motivates them and look for creative monetary and non-monetary ways to reward and retain them.