Today, we want to review the current employment market, as there is a noticeable shift going on right now. As small business owners, we’re sure you have a lot of questions and you’re wondering: “am I alone in this or is this happening to everyone?”
So, what’s going on in the market?
#1) There are more jobs than people out there right now, things are moving really quickly and candidates are being much more selective about what they’re willing to do.
#2) The price of talent is going up, and not just the little. We’re seeing 20 – 50% increases in salary expectations. Now, why is that?
We need to go back.
Try to see this from the employee point of view. For 20 years, these people have been commuting to work. They’ve been spending between 30 – 90 minutes a day in the car. They’ve been missing out on their kid’s school events or personal activities. It can hard for them to get that time off work, and they’re always rushing around, having to push things to the weekend and rushing around on weekends.
And for the last two years, we’ve told them to go home. You can do your job from home, when for the past 20 years, they were told they needed to be in the office.
They’re enjoying this time. They’ve gotten time back. They don’t have to commute anymore. They’re at home. They can walk their children to school.
They can attend their kids events. They’re enjoying the house, they’re paying a mortgage and they’re eating at home. They can go for a walk at lunch. There’s a bigger sense of community and family being built. People have become very accustomed to it.
But not everyone. There are some people who want to go back to the office. There are some people who want a mixture of flexibility and office work, and there are some people who want to be 100% remote.
So how does that translate to you, the employer, if we know a real emotional shift has happened in the market. How can we mediate the risk and what levers can we pull in order to put together a structure, the right offer for the talent and the experience we are looking for?
There are a few things. The biggest bargaining chip right now is flexibility. The people we have talked to have said if they’re currently in a flex situation or an office situation, they will take the same or perhaps a little less compensation to have a 100% at home opportunity.
Benefits have also become very important to people. So that’s another lever, your benefit package. And the third lever is cash. If we try to combine all three of these, what does it look like?
If you’re not flexible, if you’re expecting someone to show up into the office five days a week, you can expect to pay 20 – 50% more than you did two years ago.
To put this in perspective, if you had a role in your business you were paying $100,000 a year two years ago, you can expect to pay $120,000 – $150,000 for an employee with the same capacity and competency level.
If you are offering some flexibility in the role, that inflated price will come down a bit. You can use that flexibility as a bargaining check. Maybe they’re in a role right now where they have some flexibility and you want them to come over to you. You might be looking at a smaller increase, but people always switch jobs to better their station in life.
If you’re asking a person to be in the office more, so you’re taking them from an at home situation or a flexible situation, you’re going to have to pay them more, and it’s relative here. So, if they’re in an at home situation, they’re going to expect a big increase, 30% – 50% to commute to come to your job in-office. If they’re in a flex situation, that increase is going to probably be a little less. If they’re at 100% in office and you’re offering at home, you might be able to get away with the lateral salary for the individual.
If they’re in a flex situation and they want to go home and be totally remote, you probably will need to give them a small increase to entice them over. But the message here is if you’re expecting people to be in your office, you can expect to pay 30% – 50% more than you did two years ago. So, $100,000 employee two years ago is now $120,000 to $150,000 employee. Now, there are some ramifications of this as well. If you want to maintain that $100,000 salary, then you have to adjust your expectations.
You’re going to get someone much more junior who’s bringing a lot less capacity. You’ll be hiring them more for their potential than for their experience, which means the results you’ll get from that individual are going to take longer. You’re going to have to be more patient. You’re going to have to put training in place. You’re going to have to nurture that talent to get them where you want.
If you’re looking for immediate impact, then you’ll have to pay the top of the scale to entice someone to come to your business.
So we’ve assessed the market and we’ve looked at we have this role. We know what levers we can pull. We have to look at our benefit package.
If it’s subpar, it’s going to cost us more salary. If it’s on par, we can use that as a bargaining chip. We can look at flexible the three categories, the at home, the flexible schedule, or the in office, nine – five Monday – Friday, and then we have salary money.
It is important to recognize that at this time, most businesses need candidates more than the candidates need businesses. When competing in such a skewed market, you need to get your offer out quickly (8-10 days from first touchpoint) and you need to come prepared with your best offer first. The days of negotiation are long-gone, and many of these candidates are receiving multiple offers within a short amount of time. Come with your best foot forward – and use the tips above to make sure you have the most alluring offer possible.
Thanks so much for reading! Please feel free to leave your comments below, contact us via our website or schedule a FREE consultation to help you stop grinding and start growing!