Employers have high expectations for business and headcount growth in 2018, but a severe skills shortage in the fastest growing sectors could hinder plans, according to the 2018 U.S. Salary Guide from Hays, a specialist recruitment agency.
Based on a survey of more than 3,000 people, the Hays US 2018 Salary Guide asked U.S. professionals, managers, and employers about current business, compensation, and workforce trends.
More than half of employers say they will increase headcount over the next year, but three-quarters are experiencing a skills shortage in their industry. Skills shortages are already affecting business, with 92% of employers saying it is having a negative impact on areas such as productivity, staff turnover, and employee satisfaction.
With high expectations for staffing level growth in 2018, this will further challenge an already tight talent market. This will be especially true in sectors such as construction and life sciences or pharmaceuticals, where more employers said they felt skills shortages. The combination of high demand and lack of available candidates is leading Hays to recommend that employers be proactive about attracting and retaining their workforce.
However, Hays has found that employers may be missing key tools for talent attraction and retention. The most common ways employers were making their companies more attractive are through promoting company culture (48%) and competitive salary packages (43%). Asked about competition for talent, employers cited companies that can pay more as the biggest threat, and said salary was the biggest motivator for employees leaving.
However, when individuals were asked why they left their last job, just one in five said salary was the main reason. The most common reason given was career progression, indicating that by focusing on compensation and culture employers may be missing the opportunity to promote career growth opportunities internally and externally to better find and secure candidates.
"Competing on salary alone is never effective, and many candidates tell us they are looking for a company that meets their needs beyond a paycheck," said Dan Rodriguez, Hays US managing director—in a press release announcing the findings. "Employers should make sure company salaries align with market rate, and then look for other ways to differentiate themselves in the market. From a strong culture and work-life balance, to great career opportunities, and the right benefits, employers who can demonstrate that they are a great place to work will have the talent they need to succeed."
Other key findings from this survey are outlined below.
High Economic and Business Optimism Is Driving Hiring
Economic confidence and business activity growth are high. More than half of employers say the economy is strengthening, two-thirds saw activity increase in 2017, and three-quarters say business activity will increase in 2018.
This is translating to ambitious hiring plans—45% increased full-time headcount in 2017 and more than half of employers (59%) expect to increase it again in 2018. Contingent staffing levels are also increasing. Three-quarters of employers used temporary staff last year, and of those almost half (43%) increased use. Looking ahead, 41% intend to increase temporary staff again in 2018.
Ambitious Hiring Expectations Will Worsen the Skills Shortage
Finding the talent they need to meet business objectives could be a challenge, as most employers (73%) say there is a skills shortage for their industry. Employers say the main reasons for the shortage are a lack of available training and development, and fewer people entering their industry.
Salaries are Increasing Steadily, but Employees Aren't Convinced Their Wage Is Competitive
Almost three-quarters (71%) of employers surveyed increased salaries in 2017, and 41% increased by more than 3%, with similar increases expected in 2018.
Despite these increases, only half of employees say their compensation is at market rate and two-thirds of managers have increased a salary offering to secure a specific candidate, indicating that many companies are not keeping up with market expectations.
Additional Survey Statistics
- 54% of respondents say the U.S. economy will strengthen in the next 6 to 12 months.
- 64% of employers say business activity increased in 2017 and 76% say it will increase in 2018.
- 45% of employers increased full time headcount in 2017 and 59% say they will increase headcount again in 2018.
- 43% of employers increased temporary or contract staffing levels in 2017 and 41% say they will increase staff levels again in 2018.
- 73% of employers say their industry has a moderate to extreme skills shortage and 92% say the shortage is negatively affecting their business.
- 71% of employers increased salaries in 2017;
- 29% increased salaries by less than 3%,
- 26% increased salaries between 3% and 4.9%, and
- 16% increased salaries by more than 5%.
- 77% of employers say they will increase salaries;
- 33% will increase salaries by less than 3%,
- 31% will increase salaries between 3% and 4.9%, and
- 13% will increase salaries by more than 5%.
- Despite these steady salary increases, only 44% of professionals say their salary is competitive with market rate.
- Hiring managers are taking salary adjustments into their own hands with 62% saying they have increased a salary offer to secure a specific candidate.
For more information, or to download a copy of this survey, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.