INCREASING ECONOMIC, political and legislative pressure in the jobs market will make it more difficult for employers to differentiate and reward high performance using fixed pay increases if they want to retain staff, according to Mercer Human Resource Consulting.
INCREASING ECONOMIC, political and legislative pressure in the jobs market will make it more difficult for employers to differentiate and reward high performance using fixed pay increases if they want to retain staff, according to Mercer Human Resource Consulting.
A bi-annual national review on employee remuneration found that general pay increases continued to steadily rise for people who stay in the same position at around 4 per cent each year.
However there was an expectation that this rate would be outstripped by the increases for new candidates in the coming 12 to 24 months, indicating a shift from an employers’ to an employees’ market.
“In the next one to two years, we believe that there will be less opportunity to differentiate high performing employees from average performing employees through annual salary increases as organisations struggle to keep pace with external market rates in order to retain employees,” said Mercer principal Peter Matters.
“Employers will also have to pay a premium for new candidates, whereas previously it was people who stayed in their positions who were receiving the greater pay increases. This, of course, will make it more attractive for employees to leave their current positions and command a higher salary in a new role,” he said.
In order to retain employees and reward high performers, organisations will need to rely more heavily on incentive/bonus plans as a way of differentiating between levels of performance, Matters predicted.
“As we move into a more buoyant employment market, smart employers will need to allocate their remuneration spend to areas where there are skill shortages or external driven competitiveness issues,” he said.
“Improved bottom line performance by many Australian organisations means there is a greater bonus pool in 2004/5 than previous years. We expect to see organisations using this reserve to retain and motivate their key talent.”
The Mercer Market Issues Survey also highlighted several other trends across industries and positions. It predicted the biggest increases in pay in 2004/5 will be in the pharmaceutical industry.
When it comes to specific positions, the hot jobs for 2004/5 are in scientific and construction professions with an average pay increase of between 4.3–5 per cent predicted for 2004/5.
