The Rise in Compensation: What Employers Need to Know to Attract Top Talent

There is fierce competition to hire top talent as businesses try to recover from, first, the “Great Resignation,” then the “Great Rehiring,” and now the “Great Return.”

Companies in all industries are scrambling to meet aggressive growth targets by hiring more staff. Talented professionals, on the other hand, understand how important they are to business operations—and how much companies are willing to pay for them, pushing the market rate even higher.

Employees have refused to stay in jobs with which they’re dissatisfied; millions of Americans have quit over the past year as a result. Moreover, following the pandemic, candidates’ priorities have shifted. They are now looking for higher wages and more flexible work arrangements that allow them to maintain a desirable work-life balance.

Because of this, businesses have the opportunity to adapt to shifting workforce trends in order to attract and retain the most qualified professionals. More companies than ever before are embracing remote work to its fullest, resulting in unprecedented increases in compensation within certain industries and roles. We’ve seen firsthand—as evidenced by the Betts 2022 Compensation Guide derived from first-party data—that revenue-generating roles, such as sales, customer success, and marketing, have seen the greatest increase in compensation over the past 10 years.

At the same time, technology is becoming increasingly decentralized, and businesses are becoming more accepting of remote and hybrid employees. This has made it possible for compensation to become more consistent across the country, especially in high-growth cities such as San Francisco, Los Angeles, Chicago, New York, and Austin, regardless of whether the employee works remotely, in a hybrid environment, or in person. In fact, when compared with other cities, we’ve seen a marginal difference in compensation in San Francisco and New York.

So, what does the current market rate look like? When it comes to hiring for your next position, here are some benchmarks to keep in mind:

1. Compensation has increased.

Because of the strong competition for top talent, businesses seeking to scale quickly must be willing to meet or exceed the salary expectations of their employees. In the past year, we’ve seen increases in compensation of between 5 percent and 15 percent. When it comes to offering compensation to potential employees, simply being within the average salary range is no longer sufficient. Companies have the opportunity to go above and beyond the market rate when hiring new talent as well as retaining their existing employees.

Businesses as a whole have seen a 3.9 percent increase in pay, on average, this year, according to a report by the Conference Board. Since 2008, this has been the fastest rate of wage growth.

2. Compensation is not based on location.

Remote roles, such as account management and customer success positions, are becoming more competitive for compensation in top cities such as New York and San Francisco. With technology becoming less centralized and more distributed, we anticipate that this trend will continue in the future, providing remote workers with the ability to work from anywhere in the country. In fact, nearly 65 percent of companies do not plan to change compensation based on the employee’s remote location; instead, they will provide value-based pay to their talent.

3. Remote workers stay at jobs longer.

By focusing on a healthy work-life balance, companies can become more talent-focused and attract top-tier talent. Working from home and receiving a competitive salary are two of the most sought-after perks leading to happier professionals. Today, 72 percent of job seekers believe that striking a balance between work and personal life is an important factor to consider. Additionally, we’ve seen employees in remote roles stay at their jobs for up to a year longer. Businesses that have shifted their focus to the market’s demand for skilled workers are forming strong, engaged teams.

4. Companies expect to pay more for in-office vs. remote.

Hiring managers can expect to see an increase in compensation for employees who work in an office environment, as businesses prepare to return to the office. Because top talent has become accustomed to working from home or in a hybrid work model, compensation must be adjusted to reflect this shift in the workplace, especially for in-office roles. As a result, 10 percent to 20 percent of companies expect to pay more for in-office versus remote roles to account for potential relocation following the pandemic, the daily commute, and other factors.

Because of the strong competition for top talent, companies that want to grow quickly must be willing to meet or exceed their employees’ salary expectations. When it comes to offering potential employees compensation, simply being within the average salary range is no longer sufficient. In order to account for these factors, businesses have the opportunity to go above and beyond the market rate when it comes to hiring new talent, as well as retaining existing employees.

Carolyn Betts is the CEO and Founder of Betts.

From: BenefitsPRO