Employers have more ways than wages to reward staff, says expert

Companies take strategic approach as 60% of workers are expecting a salary increase, while employers say they will only offer a 1-3% rise

Lynne McCormack, general manager with FRS Recruitment.

Employers are advised to be more creative approaches to the career development of their staff to help them offset employees’ rising salary expectations.

Lynne McCormack, general manager of FRS Recruitment, also advises employers to consider their options around supporting workers’ lifestyle and work-life balance preferences, notably being more open to hybrid and flexible work requests.

A recent survey by FRS Recruitment revealed a marked rise in the salary expectations of respondents in most industry sectors.

In this Q&A interview, Lynne McCormack looks at some of the domestic and global market factors that may make it hard for employers to live up to those wage expectations. She outlines some approaches that could work for all parties in finding the right balance between wages and other benefits.

Are you expecting a period of employees moving jobs given their elevated salary expectations expressed in your recent survey? 

Yes, we certainly expect to see some more fluidity in the market this year. Currently that’s being driven by employee confidence and expectations. Most of those with jobs feel the market is in their favour at present. They know we have full employment in this country and they strongly believe there are other options available to them in the market.

For example, 7 out of 10 people believe they could find a new job in three months or less if they were to lose their job. With as many as 60% of people also expecting a salary increase this year and most employers (55%) saying they will only offer a 1-3% bump, we do expect that will have an impact on the number of employees taking a look at the market and assessing their options.

Our research also showed that 45% of people would move for a salary increase of 10% or less, a figure which rises to 3 in every 4 people if the salary hike on offer was 20%. In an economy where there are plenty of opportunities and not enough skilled, experienced staff, that is certainly something employers will need to take into consideration.

What are the main factors employers are citing as hampering their ability to increase their wage bill? 

Many employers are feeling the strain that has been brought about from uncertainty across the global market and the continued growth of operational costs. Everyone knows how things have changed in terms of the world economic picture since the turn of the year, with further policy changes around tariffs and more a significant issue. Employers are reacting to those changes and taking a more conservative outlook, in case conditions were to become even more challenging in the coming months.

For example, in our recent Employment Insights Report, 72% of employers said they are concerned about the general economic outlook and almost half said if there were to be further tariffs imposed by the US, that could impact their hiring plans for the year.

So with this more cautious outlook and the ongoing financial pressure generated by the rising cost of doing business in many sectors, employers are trying to keep other overheads under control. For many employers, probably the most significant of those costs is salaries, so they want keep the levels of increase to a minimum where possible. However, they also need to ensure they have sufficient skills available in a market where there are many skills shortages. So this may force many employers to stretch their budgets to ensure they have the personnel they need.

Another impact we’re already seeing from this more cautious outlook is a significant move towards temporary hiring. Employers are still seeking solutions to meet their staffing shortages, but some don’t want to make longer term commitments in the face of potentially changing economic circumstances. So many are utilising the temp market in order to meet their staffing needs.

Other than boosting salaries in line with inflation, what other actions can employers take to retain talent?

If employers are finding it difficult to meet salary expectations then they need to be more flexible in what else they can offer. That starts with their stance on hybrid and remote working. Over the last year there has been an increased push from employers to bring people back to the office, with 2 out of every 3 employees being asked to work another day or more in the office. A lot of employees really cherish being able to operate on a hybrid or remote basis and many are willing to consider salaries at a lower level if this is an option available to them.

Employees are also increasingly focused on their career pathways. They want to know progression is a realistic option and that there may be training or development opportunities available to them. Employers who can offer these kind of incentives, who also encourage mentorship and offer enhanced benefits or wellness are reaping the rewards when it comes to securing hard to find talent.

For all employers, culture is also key. The more ingrained and positive the company values are in the workplace, the more that stands to them and sets them apart when it comes to employee attitudes. For most companies, their best ambassadors are their employees, so if they buy into the company culture that will go a long way towards generating interest from a wider field of potential candidates.

Can any lessons be learned from previous surveys as regards salary expectations and how the recruitment markets later evolved?

The purpose behind our Employment Insights Report is to provide an annual snapshot of the employment market from the perspective of both employers and employees. In that sense, we can see how the market evolves every year and the prevailing mood of the market continues to shift.

Over time, perhaps the most obviously learning we’ve seen is that employers who enjoy the most success in terms of securing talent (and keeping it) tend to be the ones who move in line with the market. While on the flip side, employers who remain passive tend to lose out.

We’ve also seen in previous years how tighter labour markets, where the demand outstripped the supply of skilled, experienced personnel, drove pay higher. This was especially true in high demand sectors. That aligns with the current state of the market this year.

Employers also need to make sure they get the balance right when it comes to managing the expectations of staff who currently enjoy hybrid working. There are many people who have built their lives around the flexibility provided by being out of the office for 2 or 3 days a week. Pressing those people to spend more time in the office may make them unsettled and if they are highly skilled personnel they know there will be other options open to them who may be more accommodating when it comes to facilitating their preferred hybrid approach.