Honesty is the best policy, according to over three quarters (78%) of employees who, in the Hays Ireland Salary & Recruiting Trends 2020 guide, told us that it is important for their organisation to be transparent about how pay levels and pay rises are set. Nearly half (49%) of employers, however, do not believe that their organisation is consistently transparent about how their workers’ salaries are agreed. This absence of transparency can have far reaching consequences, particularly in the current market.
Why is this such an important issue?
40% of Irish professionals are not satisfied with their salary. The main reason given for this is that they do not feel it reflects their individual performance (62%). This is despite most employers (70%) believing that individual performance is the most important factor when considering an employee’s request for a pay-rise. This mismatch indicates a fundamental breakdown of communication between employee and employer regarding how pay levels are set and communicated.
The cost of this miscommunication is retention. The main reason employees left their role in the last year was because their salary was too low (34%), and more than half (55%) are at risk of leaving their roles in 2020 unless something changes. Losing skilled workers in today’s skills-short market is a major threat to employers, particularly if their lack of transparency is also impacting their chances of employee attraction.
This also has an impact on the gender pay gap, and without greater communication about this issue, and assurances that men and women are treated equally, hiring plans will continue to be negatively affected. Currently, nearly a fifth (18%) of employers suggest they are aware of a gender pay gap in their organisation. Of that number, 67% say it negatively affects candidate attraction and 76% claim it negatively impacts staff retention.
Is it all about money?
Yes and no. While 52% of those surveyed would be tempted to change jobs due to the salary and benefits package on offer, 43% said that a counter offer of increased pay would not tempt them to stay, suggesting that salary alone is not necessarily a deciding factor, and employers should take a holistic approach to employee rewards.
To that end, employers should also consider their workers’ forward careers. Career progression is the second most common reason people gave for leaving their roles (26%), closely followed by a lack of career development opportunities (23%). Another compelling offer is the promise of more flexible working hours, as almost a third of employees (29%) said work-life balance was the most important factor for them when choosing a new role.
What can we expect in 2020?
6 in 10 employers say they are optimistic about the wider economy and employment opportunities it may create within the next five years. However, this represents a decrease from three quarters (75%) of employers who said the same last year.
That said, short-term employment plans are strong, and 78% of employers expect to recruit in the next year, but shortages of suitable candidates (64%) and competition from other employers (54%) are expected to be considerable challenges.
With competition rife for new talent, and an ever-present threat to talent retention, employers cannot afford to ignore the desire for greater transparency in the workplace. Assessing the needs of your team on an ongoing basis and being transparent about how pay levels and rises are set can help address salary requirements before it is too late. Two-way communication is key. Listen to your employees and they’ll stay with you for a long time.
For more insights into the market and recommendations to help you overcome key challenges to hiring in the year ahead, request your copy of the Hays Ireland Salary & Recruiting Trends 2020 guide.
About this author
Mark joined Hays in 1985 as a trainee consultant and has been in various roles, sectors and locations during his time at Hays. He is a Board member and in 2019 his responsibilities extended to Hays Ireland.