2014 – The Year of the Great Balancing Act
In 2014 companies expect growth and increased hiring. Competition for key talent is heating up. Growth and hiring surges are causing big concerns about retention as employees leave for greener pastures.
Companies are cautiously optimistic about 2014, with 72 percent expecting their financial situation to improve (up from 66 percent in 2013), and only 5 percent expecting it to weaken (down from 7 percent in 2013). Small companies are the most optimistic about their future financial performance (75 percent of respondents), beating out both large and medium companies, where 66 percent and 72 percent expect improvement in 2014. The information, Media & Telecommunications Industry is planning to fly the highest in 2014, with 84 percent of companies in this industry anticipating improved financial performance.
Hiring is also up over recent years with 54 percent of companies reporting plans to continue expanding in 2014. Raises returned in 2012 and that trend continued with 83 percent awarding salary increases in 2013, and 88 percent planning to give raises in 2014.
Competition is heating up and it’s becoming increasingly challenging to strike the balance between paying enough to retain top talent and adhering to the compensation budget. Talent retention continues to be the primary concern among businesses. The skills gap also continues to be a top concern for most businesses. Half of companies surveyed cited they are struggling to fill skilled job positions with nearly two-thirds of companies in the Information, Media and Telecommunications industry and Manufacturing companies reporting concerns.
* Across all industries, the main reason why companies adjusted compensation was “Performance-Based Pay Increases” (54 percent) and second was “Cost of Living
Adjustments” (20 percent).
* Small-sized companies were more likely to adjust compensation to encourage retention (11 percent) compared to medium-sized companies (6 percent) and
large-sized companies (3 percent).
* The most important compensation objective guiding the respondents’ 2013 decisions was “Retaining Top Employees,” which was chosen by 66 percent of respondents (identical to 2012).
* This was true across all company sizes and industries.
* The second most common response was “Attracting New Talent,” with 11 percent of respondents choosing it as their primary objective, and 39 percent choosing it as the
second most important objective.
* “Managing internal pay inequities” was the least important objective, chosen by only 6 percent of respondents as being a top objective.
If your company is experiencing challenges balancing retention, hiring, and your compensation budget, give YPP a call and see how we are helping our clients with this delicate balancing act.
*Source: Payscale 2014 Compensation Best Practices Report. YPP partners with Payscale to provide market compensation data to our clients.