The Recession is History – Compensate Accordingly
As we move closer and closer to the end of the year, our industry is reaping the benefits of the strongest economy in some of our lifetimes. Unemployment is at historically low levels, consumer confidence is high, people are building, and companies are expanding. For the first time in recent memory, there are more open jobs than there are workers to fill them. This led President Trump to recently remark that in this economy, for the most part, people “can have whatever job they want.”
But while the economy roars along, we continue to hear from executives and job candidates alike that compensation packages are often not in line with the booming business environment our industry is enjoying. In fact, employers are increasingly in danger of losing senior talent due to compensation strategies that were better suited for the Recession than they are for this booming economy. So, our message to employers is clear: the recession is history, so compensate accordingly.
The reality is that with 3.7% unemployment and more than 7 million jobs available, every company is in the competitive market for either recruiting new talent or retaining senior-level staff. Employers cannot escape one or both of those scenarios in this economy. How they perform in those scenarios is directly linked to whether they are offering Recession-era compensation packages or are willing to upgrade their pay structures to reflect current market values.
Employers must face the hard truth that base pay and incentives are being pushed ever upward by the supply of and demand for talented workers. And employers recruiting individuals away from their current jobs with other companies will need to work even harder to get them. If it’s a local transition, the candidate will likely ask for at least 10-15% more in pay. If it’s a relocation to another area, employers should be prepared to offer at least 20% in increased salary. With this process constantly repeating itself within the industry, salaries are ratcheting up at record levels. The only way for employers to avoid the “ratcheting effect” and retain their employees is to compensate them in accordance with today’s economy before an outside company recruits them away. And whether the company is paying using specific salary ranges or through broadband compensation, at the end of the day, employers will have to pay what the employee wants in order to keep them.
That’s the economy we currently live in. With all of the benefits, it still comes with challenges. Schaffer Associates knows how to turn those challenges into opportunities. We can help structure compensation packages in ways that make our clients’ teams more attractive than the competition. So before offering Recession-era salaries, organizations should give us a call. We can recruit – and retain – in all economic conditions, and those conditions are rarely better than they are right now.
Headquartered in Charlotte, North Carolina, Schaffer Associates is a national management consulting firm specializing in executive search and organizational strategies for the hardware, home improvement, building materials, and consumer products industries. As the premier management consulting firm serving the industry, we help build organizations and leadership teams that foster corporate growth and success well into the future.