No raise? No problem. Just look for a new job
While many employers may be freezing salaries for existing workers during the pandemic, they’re apparently willing to negotiate higher pay with new hires new research shows.
The pandemic has made for a tumultuous year for both job seekers and employers, and now retention is another concern that employers can move up on their list of priorities.
According to new research from staffing firm Robert Half, 88% of senior managers worry about losing top talent. Of those, 39% say salary reductions and planned salary freezes are to blame.
However, despite the challenges of this year, many employers have found ways to compensate their workers:
- 72% of companies have maintained or increased pay for new hires since the pandemic began;
- 86% are as likely to negotiate salary with new hires today compared to one year ago; and
- Of those, 36% are more open to discussing starting pay with new hires compared to one year ago.
“We are seeing two salary-related trends unfold,” says Jim Jeffers, regional vice president of Robert Half in Madison. “For the most part, salaries are remaining unchanged for employees. Employees who have taken on additional responsibilities or projects may expect to be compensated for heavier workloads. At the same time, companies may be unable to offer raises to existing employees now due to budget cuts and/or salary freezes. If employees feel underpaid, they could quit, and staff morale and productivity could suffer. It’s critical right now for employers to evaluate compensation levels to ensure they’re offering competitive pay.”
Despite lingering high unemployment, the research shows a majority of companies are offering new recruits pay that meets or exceeds pre-pandemic numbers. More than four in 10 senior managers surveyed (44%) said starting salaries for new hires have held steady since the spread of COVID-19 began, and nearly three in 10 respondents (28%) noted an increase in base compensation.
Managers at midsize companies (500 to 999 employees) are more likely to negotiate salary today versus 12 months ago (44%), while those at small firms (20 to 99 employees) are least likely to engage in back-and-forth about compensation (28%).
“We are also seeing brighter salary prospects for jobs seekers,” continues Jeffers. “As businesses resume hiring for critical roles, they must offer competitive pay to secure in-demand talent. Even in a market with high unemployment, professionals with in-demand skills have options. Employers should research compensation trends regularly and be prepared to move quickly and negotiate salary with top candidates.”
Many companies have had to make difficult business decisions as a result of the pandemic, notes Jeffers. While employers in some industries are reducing pay, permanent wage cuts aren’t sustainable, he explains. However, “wage growth can depend on many factors and it’s hard to say when it will resume and by how much.”
It’s also too soon to say exactly how increases in remote working may affect salaries moving forward, though Jeffers notes companies are finding remote work arrangements effective and, without geographic limits, they can hire from literally anywhere. With companies being able to lower overhead costs by maintaining fewer brick-and-mortar office spaces, that could also work to the advantage of remote workers seeking higher pay.
If salary increases or bonuses are not in the budget, companies should consider offering nonmonetary benefits that employees value, like flexible scheduling and professional development opportunities, advises Jeffers. “As a result of the pandemic, workers are reevaluating their priorities and willing to make career changes that improve their overall quality of life. Companies should be transparent with employees about their financial performance and when they expect to revisit salary discussions.”
So, how should employers respond if workers say they’re underpaid or ask for a raise, especially in light of what may be challenging times financially for the business?
For starters, don’t ever tell your employees they’re just lucky to have a job. Keep an open mind, recommends Jeffers, have an honest discussion, and ask them questions to learn more.
“Find out their reasons for requesting a raise — have they researched local salaries for their position, skills, and experience level?” asks Jeffers. “Have they completed work beyond their job description? How have they moved the needle/exceeded expectations?”
If the employee has done everything right but you just can’t swing a salary bump right now, be transparent about your company’s financial performance and why you may need to revisit salary conversations later when business is more stable, says Jeffers. That honesty could go a long way — so long as you follow through when market conditions improve.
On the flip side, if you’re a job seeker engaged in a salary negotiation with a potential employer, there are a few things to keep in mind.
Research prevailing salary trends for your position, skills, and experience level — and be confident about what you’re worth, says Jeffers. Additionally, research the company’s financial standing and if it’s shaky, be prepared to ask about the possibility of revisiting pay discussions when the business is on firmer ground.
Further, job seekers should practice asking for what they want and learn how to overcome potential objections.
“Discuss the value you can bring to the organization,” advises Jeffers. “Be honest about your current situation, salary expectations, and other potential offers. And remember that salary is just one part of the equation; a generous benefits package or opportunities to learn and grow with the company may compensate for a lower starting salary.”
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