Time for a Salary Review?
At this time of the year, the most common question we get asked is whether we can support people with independent salary advice.
To be truthful, this is almost always on the minds of people looking for a new job but in February and March, as part of the annual planning cycle, the tables turn, and employers become very keen to understand how competitive they are.
While we would never breach the confidentiality of our clients and candidates, with over 20 years of experience working with public practices across the Northeast, we have the privilege of gaining extensive insight into average salaries across all levels of the industry. It’s this broader picture that enables us to help firms determine whether or not they are paying the market rate.
Echoing our experience, the most recent KPMG and REC report on jobs found that easing pandemic restrictions have improved market confidence and given rise to a historically sharp uplift in recruitment activity.
With a scarcity of candidates, the knock-on effect is more upward pressure on starting rates of pay, which is now increasing at the third-fastest pace since records began, behind only October and November of last year.
Couple this with sky-high household bills and rocketing inflation and it’s easy to see why having an understanding of where your company’s offer sits amongst your competitive set has never been so important. You simply cannot afford to get this wrong.
Specifically in the North-East, while we continue to see employees re-evaluating their work-life balance in the wake of Covid, there has also been a distinct rise in people searching for new roles purely for monetary reasons.
In a recent poll of business owners, 30% are planning no salary inflation rise for their teams this year, in contrast to 63% offering more than the standard 2%. However, with starting salaries rising between 10 and 15%, whether people are feeling underpaid and undervalued, want to work permanently from home, or have seen friends receive multiple job offers and move on to do the same role for more, people who are feeling the pinch are getting tired of it.
What to consider
Right now, a standard inflationary increase applied to everyone in the business at the start of the new fiscal year is a good start, but it is only good enough if your salaries are on, or ahead of, the market rate.
When speaking to our clients, we encourage them to set aside time to review salaries quarterly. While it may sound like overkill, the market is changing at such speed, it will be time well spent.
In the world of accountancy, while professional qualifications have a benefit to your business, often practical experience is more valuable so, please, never base salaries on professional qualifications alone.
Of course, not everyone gets blinded by money. Each candidate is unique and there are more factors to consider but, if you are recruiting and think the person is right for you, we would urge you to offer your best salary first. This is not the time to scrimp and save and you don’t want to be the one that falls at the last hurdle.
Regarding your existing team, making sure they know you value them is critical. When reviewing their salary, try asking yourself what life would be like if they were gone. Would they be easy to replace? Are they worth the top end of your salary range? If the answers are no and yes, it’s probably a good time to up the ante as it’s a competitive market out there.
The good news for business is that rising salaries won’t keep increasing exponentially. And, when they do plateau, being in line with the market rate will make it much easier to not only recruit but is far less likely to upset anyone when a new team member joins on a higher salary.