Fighting the Great Resignation with Cash
November 8, 2021 – As the Great Resignation has extended worldwide, compensation experts have reminded organizations that there are numerous ways to attract and retain employees besides paying them higher wages. But there’s overwhelming evidence that the go-to move for most companies continues to be paying more, according to the latest findings from Korn Ferry, which found a record a number of pay raises over the past quarter.
Indeed, wages and salaries increased 1.5 percent in the third quarter—which happens to be the highest jump over a quarter span since the U.S. government started tracking the statistic in 2000. That’s also up sharply from the previous quarter’s 0.9 percent increase. Salaries overall are up 4.2 percent since September 2020 (they had risen 2.5 percent in same period the year prior). Those percentages might not sound like much, but multiply them by tens of millions of workers, and it starts adding up for corporate leadership.
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“Many countries are seeing similar wage increases,” said Benjamin Frost, a solutions architect in Korn Ferry’s products business. “And the increases are far exceeding what clients told Korn Ferry they expected to dole out over the coming year. When you wake up and see all the resignation letters on your desk, it’s not surprising you reach for your wage lever to keep employees from going out the door.”
Salaries often go higher during a healthy job market, such as the one many countries are now experiencing. But many organizations have been caught short-staffed as the worst of the pandemic’s economic impacts have faded away, according to Korn Ferry. At the same time, the pandemic redefined priorities for many people, convincing them to seek out jobs and organizations that align with their values.
Related: Pandemic Pause: Job Change Reluctance & Realities in the Age of COVID-19
Lower-paid workers have seen the biggest gains, with wages in the leisure and hospitality industry rising by 7.6 percent in the third quarter from a year earlier. In retail, they’ve jumped 5.9 percent. “It isn’t surprising that many companies are pushing salaries for lower-level hourly employees higher,” said Tom McMullen, a Korn Ferry senior client partner who leads the firm’s pay equity and inclusive rewards practice. “Those industries are facing particularly significant worker shortages right now. Companies have got to do what they’ve got to do to get people in the door.”
Still, experts say there may be other, more effective strategies for keeping employees engaged and loyal. In survey after survey, Mr. Frost said, “employees around the world say their top priorities from employers are clarity around what they need to do to do a good job, transparency about their career paths and support for future career growth. Initiatives such as skill development programs, mentorship opportunities and workforce planning exercises can address those priorities directly.”
Those other solutions, however, often take time to implement. “Increasing wage rates isn’t a silver-bullet solution, but lots of organizations go there because it’s very visible,” said Mr. McMullen.
At the same time, a pay boost might not do much for winning over employee loyalty. “The delight of an increased paycheck usually lasts about two pay periods,” said Mr. Frost. “People want to be paid fairly, but they also want to have meaningful assignments, work in a healthy culture and see opportunities for development.”
“It has to be a lot more than pulling the pay lever,” said Elise Freedman, a Korn Ferry senior client partner who leads the firm’s workplace transformation practice.
Related: Hiring Top Talent In Unprecedented Times
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
