Salary expectations are growing, with more than nine out of 10 employers expecting wages growth of 4% this year, while nearly two-thirds are also more worried about losing high performing employees, according to the new Hudson Salary and Employment Insights 2012 report.
The result comes despite the labour market beginning to soften, as financial institutions, retailers and manufacturing businesses shed thousands of jobs, with banks also warning of hundreds more job losses over the next 12 months.
The survey also reveals nearly seven out of 10 employees are considering moving jobs in 2012, despite the softening market.
Hudson Asia Pacific chief executive Mark Steyn said more employers are coming under pressure to control the costs of these new hires. Such a task is difficult considering salary is a main driver for 37% of employees, he said, noting many employees believe it will be “easy” or “very easy” to find another job.
But despite that pressure, 94% of employers expect to award increases of between 2-4% in 2012, with 68% saying they had done so last year. Such a market still remains positive for prospective employees, as organisations compete and salaries rise.
“We’re seeing a real skills shortage in finding talented people,” he says. “There are a lot of people in the market place, but do they have the skills to take them through tougher times?”
“These companies are being incredibly particular… I don’t think you’re going to see much employment growth, but that’s not an issue. The real issue is there is pressure on costs.”
The survey reveals two-thirds of employers are also concerned about letting go of their top performers, as existing employees are also willing to test the market. Two-thirds believe they deserve a pay rise and are considering changing jobs.
But 36% even said a pay-rise would convince them to stay in their current role.
“The focus is on truly high performers and understanding that they’re going to have to pay more to retain them.”
“Profits might not justify wage increases across the board, but these businesses are saying, ‘we’re going to have to give them to keep the top performers’.”
Steyn also notes that despite these employees looking for other jobs, that doesn’t necessarily mean in a different company – they may just want a new role.
“That’s why, at the same time, you have companies taking second choice candidates. They’re looking at someone who wants an awful lot, we can’t always tell – but someone may be willing to do that job for $40,000 less within the company.”
About 44% of employees were described as “not good”, and over half of hiring managers have said they’re under pressure to improve the quality of their new hires.
As a result, hiring processes are going to become much tougher. 20% of hiring managers want to see more years of experience, and 26% focused on an area of expertise.
But Steyn warns that may be a mistake.
“That’s really strange, because all the research done over 20 years would indicate the correlation between years of experience and technical skills – there is little correlation to perform a role.”
“The ability to perform a roll is more driven by their motivational drivers, cultural alignments and people are not assessing for these.”
Steyn says if businesses want to hire good quality candidates and manage their costs, they need to rethink how they’re hiring.
“You’ve really got to hire someone for potential, not whether they’ve done the job year after year. Have they got the right motivation? And how do you assess for those?”
Steyn suggests that may even save businesses in the long run, saying you should always keep employees challenging to keep the top performers. “You don’t want to get someone who’s done the same thing again and again,” he says.