Closing the candidate/employer salary gap

Even when being conservative, candidates are expecting greater salary increases than they are likely to be offered. How can employers close the expectation gap between new recruits and reality?

BY Cameron Edmond 01 Aug 2013

More than one in five candidates are expecting to receive salary increases of over 6% in the current pay review period, despite 89% of employers planning to keep salary increases below that, new research from Hays has uncovered.

The annual Hays Salary Guide found that just 3% of employers plan to increase salaries more than 6%, with 8% not planning to increase salaries at all. The majority (57%) of employers plan to increase salary by 3%.

Nick Deligiannis, Australian and New Zealand managing director of Hays, said that employers are seeking to maintain costs in the coming period, meaning they may need to look to provide other opportunities for growth to attract candidates.

While employees must not set their bar too high, employers must be wary, as well. “Employers also need to tread carefully in this market and ensure they are selling the full range of the benefits they offer employees when they are interviewing job candidates,” Deligiannis said.

Open communication needs to be established between employers and both their existing and potential employees in order to help close the pay expectations gap. For employers not seeking to provide increases, additional benefits should be considered.

Key HR take-aways

Providing promotions/pay increases is the traditional method for organisations to ensure retention, so being unable to do so can prove problematic. HC uncovered a number of strategies HR managers can employ to avoid unsustainable pay:

Help develop new skills – some employees are not as interested in climbing the ladder as they are growing in their current role. Allowing employees to develop new skills and attributes is sometimes the reward they are after.
Give them meaning – often, employees want to partake in meaningful work. Demonstrating to an employee how their work helps others can be hugely effective in retention.
Be “cool” – modernising the workplace with more open-plan areas, relaxed social media policies, or other similar benefits can be effective, but some employees might like the way things are. Gauge your workforce’s interest in modern workplaces before you begin implementation.
Chances to lead – some employees simply want promotions because they wish to sharpen their leadership blade. Providing more casual, “unofficial” leadership opportunities can satisfy these keen employees and give them a sense of purpose.

Regardless, alternatives to pay increases and promotions are always viable options. Kim Seeling Smith, founder and CEO of Ignite Global, suggests open communication can help reveal what strategies are right for your organisation.

”By brainstorming ideas with the staff member on how they can continue to develop, in lieu of a vertical promotion and how they can continue to feel well paid, in lieu of a pay rise you’d be surprised at the very simple solutions that can solve what you might otherwise thing of as a very complex problem,” she said.