As Labor Day approaches, it
appears professionals may have more negotiating power with employers than they
think. Fifty-five percent of hiring managers surveyed for this year’s
Employment Dynamics and Growth Expectations (EDGE) Report said it was
difficult to find qualified candidates 12 months ago; 81 percent said
recruiting is equally or more challenging today. More than half of hiring
managers who are having trouble recruiting cited a shortage of qualified
professionals as the primary culprit. Nearly two-in-five hiring managers plan
to increase starting salaries in the next year to attract new talent.
Although the balance of power may have shifted somewhat to favor highly
skilled workers, employees themselves are still feeling cautious about the job
market and are less willing to negotiate higher salaries. Four-in-ten survey
respondents categorized the job market as difficult 12 months ago and 85
percent said it is equally or more challenging today. Nearly one-in-five
workers said they are less likely to ask for more money from a potential
employer in the next 12 months, and the number of those who were more likely
to negotiate increased compensation dropped significantly compared to one year
ago.
The survey and report were developed by Robert Half International (RHI),
the world’s largest specialized staffing firm, and CareerBuilder.com, the
United States’ largest online job site. The survey includes responses from
more than 1,000 hiring managers and 3,000 workers, and was conducted from
July 27 to July 31, 2006. It was designed to compare and contrast the
perspectives of hiring managers and workers to determine which group has more
clout in the current job market.
Increasing Talent Shortage
Faced with a large number of baby boomers retiring and smaller
generations of replacement workers entering the workforce, hiring managers are
voicing concern over their ability to fill vacant positions with skilled
staff. When the EDGE survey was conducted in 2005, 42 percent of hiring
managers reported it was difficult to recruit qualified employees 12 months
prior and 32 percent felt it was even more challenging at that time. In 2006,
55 percent of hiring managers reported it was difficult to recruit qualified
staff 12 months prior with 34 percent stating it is even more challenging
today. Fifty-two percent of hiring managers attributed the difficulty to an
overall shortage of qualified workers, up from 47 percent last year.
Employers are having the hardest time recruiting staff-level employees.
Thirty-seven percent of hiring managers said they are struggling to find these
candidates while 15 percent reported difficulty filling director, manager and
team leader positions.
“There is strong demand by employers for highly skilled employees to fill
staff-level positions,” said Max Messmer, chairman and CEO of Robert Half
International. “The need has been especially pronounced in accounting and
finance, where corporate governance mandates have resulted in the creation of
accounting jobs that did not exist five years ago.”
Although hiring managers are utilizing more aggressive recruiting
tactics, workers are proceeding with caution. In 2005, 55 percent of employees
polled said it was difficult to find a job 12 months prior and 42 percent said
it was even more challenging at that time. In 2006, the numbers have improved,
but indicate there is still a lack of confidence among workers. Forty-two
percent of respondents said it was difficult to find a job 12 months ago and
37 percent said it is even more challenging today. Thirty-six percent believe
it will be even more challenging 12 months from now.
Compensation Trends
One-in-five hiring managers attributed their difficulty in finding
qualified staff to the inability to offer competitive compensation packages,
similar to last year’s findings. This year’s survey suggests more hiring
managers may do something about it. In 2005, 28 percent of hiring managers
surveyed said they increased compensation levels for job offers in the last
12 months. In 2006, that number rose to 36 percent. In 2005, 33 percent of
hiring managers stated they would increase compensation levels for job offers
in the next 12 months. When asked this same question this year, 38 percent of
employers said they plan to raise salaries, signifying a sustained trend
toward more generous compensation.
Staff-level professionals stand to benefit the most, with 36 percent of
hiring managers stating they are most willing to increase compensation for
these positions. Eighteen percent of hiring managers said they are apt to
increase compensation for director, manager and team-leader positions, while
13 percent will focus more on administrative and office support.
Meanwhile, workers seem less inclined to negotiate more lucrative
compensation packages. Twenty percent of professionals reported they were less
willing to negotiate a more generous job offer today than 12 months ago.
Thirty-two percent of workers said they are likely to negotiate more lucrative
compensation 12 months from now, down from 47 percent in 2005.
“Forty-five percent of workers reported their compensation has increased
in the last year, yet a much smaller number are willing to ask for a better
deal going forward, likely due to insecurities about the United States economy
and job market,” said Matt Ferguson, CEO of CareerBuilder.com. “The United
States continues to add jobs and businesses are struggling with a shrinking
labor pool. Workers who are not maximizing the earning potential of those
opportunities are literally selling themselves short.”
Employee Turnover
In addition to stepping up measures to attract new talent, businesses are
focusing on retention. Twenty-one percent of hiring managers reported their
employee turnover rate is higher than it was 12 months ago; the same
percentage expect it to be even higher 12 months from now. Thirty percent of
hiring managers reported their firms have instituted new policies and programs
to increase staff retention rates in the last 12 months, up from 23 percent
this time last year. The primary measures taken included offering pay raises,
bonuses, better benefits and more flexible schedules.
Investing in retention efforts is well-advised. Twenty-six percent of
employees stated they are currently looking for a new job. Nearly three-in-ten
plan to change jobs in the next year and two-in-five expect to do so in the
next three years, similar to last year’s findings. The job benefits workers
value most are health insurance, flexible work schedules and 401(k) plans.
“While competitive compensation and benefits are important to employees,
so is working for a stable company with a positive work environment,” Messmer
said. “Firms that cannot offer top salaries should look at what they can offer
that others do not, including professional development programs.”
Survey Methodology
The EDGE survey was conducted from July 27 to July 31, 2006. Methodology
used to collect survey responses totaling more than 3,000 workers for this
study involved selecting a random sample of comScore Networks panel members.
These web panel members were approached via an e-mail invitation, which asked
them to participate in a short online survey. The results of this survey are
statistically accurate to within +/- 1.78 percentage points (19 times out of
20). Note: This sample included more than 1,000 hiring managers. The results
for the hiring managers are statistically accurate to within +/-
3.09 percentage points (19 times out of 20).
