Can pay equity be maintained despite the labour shortage?

These days, candidates are scarce. To attract talent, you decide to increase entry salaries and offer a hiring bonus. But what’s the impact of these practices on your current employees? If, in absolute terms, these measures seem effective in the short run, what are the consequences for your company’s payroll and for equity between your employees?

Could you end up causing more harm than good?

Maybe you feel like you can’t get away from it. Talent is in high demand everywhere and you hope to stand out in order to attract candidates to your company. However, offering higher wages to new employees and signing bonuses can create an imbalance within your company.

You could then be faced with employees who have more experience or more training who find it unfair. If you’re not able to offer the same to your already existing employees, then you may experience high turnover and end up back at square one.

In addition, organizations are subject to equity legislation, which brings its share of questions. Raising wages in this context then becomes complicated, even risky.

What can you do to limit damage?

When you consider that over 80% of organizations are worried about employee loyalty, it’s no surprise that 67% of them plan to implement specific measures to make sure they keep their employees.

One of the solutions often mentioned by experts is to foster upskilling. This is a measure planned by 62% of employers. By training your current employees, coaching them and then offering them promotions, you kill two birds with one stone. The feeling of injustice within your company will decrease, limiting retention challenges. What’s more, you’ll fill positions that are sometimes difficult to fill.

Also, by knowing the market, you’ll be able to position yourself against the competition. However, a bidding war is not the solution, as your financial resources might be limited. So how do you win over your talents? By developing a completely different strategy.

Can you rethink your strategy?

One of the first things to do when dealing with a labour shortage is to strive for balance in your compensation strategy. In the delicate dance of attraction and retention, maintaining a certain level of pay equity is more than necessary, but it’s not the only aspect to consider.

This is where global compensation comes into play. According to a survey, 55% of human resources professionals surveyed point out that their company does not have a global compensation policy.

Beyond salary, global compensation includes bonuses, pension plans, group insurance, vacations, work schedules, workload, work-life balance, training opportunities, programs recognition, employee assistance programs and more.

This is part of the measures adopted by employers that I mentioned above. Here’s a look at some of the approaches that some organizations have taken to reduce retention challenges:

• 90% have introduced more flexible working measures;
• 50% have improved their health and well-being measures;
• 46% have adopted a more inclusive and diversity-focused approach.

A good global compensation strategy is first and foremost focused on people’s needs. If you don’t have such a policy, you should consider developing one with the input of employees.

As you can see, global compensation doesn’t just focus on financial benefits. And as I mentioned in a previous article, salary alone is not enough to attract and retain talent. In this regard, corporate culture and the employer brand occupy a prominent place, and global compensation is another important piece of the puzzle. The real competition for talent acquisition is no longer just a money game; it’s also about standing out in terms of what you can offer on a human level.

• Talent Shortage