Be Ready to Pay More, Meet Employee Demands in 2022 

The statistics are staggering: 10.4 million jobs were posted online and 4.4 million Americans quit their jobs in September, the highest number of quits in the 20 years of government tracking. Professional and business services, healthcare and social assistance, and retail all saw huge numbers of resignations in September. 

The supply of jobs is at an all-time high. Yet, demand for those jobs has ebbed to an all-time low. Jobs are out there at all levels — not just the ones we see on Main Street where restaurants and service businesses are trying to hire, but across all industries.  

The nature of the open positions does not necessarily match up with the available workforce, but the issue is not only a skills mismatch. A large portion of those 10.4 million available jobs is likely vacant at companies that are forcing people to do things they’re not comfortable doing. 

These jobs are open because people have left them.  

They’ve left because companies require people to get on a train or a subway, go into a crowded office building, and sit inside with a bunch of other people, with or without masks. Not only are employees unwilling to risk their health or safety, they are also no longer willing to add hours of commute to their work weeks or work the standard 9-5. After more than a year and a half working from home, employees have become accustomed to a healthier work-life balance, flexible schedules, and more time at home with their families. That leaves many employers struggling to hire because the environment they’re offering is not one employees are migrating to, either by requiring people to come into the office or to make compromises to their safety.  

The “Great Resignation” is driven by people looking for something better: benefits, salary, flexible working hours to accommodate an improved work-life balance, and the freedom to work remotely.  

Employers Must Adapt Now 

While this means businesses are facing significant challenges attracting and retaining talent, it also means they need to question their recruiting strategies to create the right environment where employees want to come and stay.  

Employers must realize that the equation is no longer open jobs HERE (in the commutable distance to the workplace). The definition of “here” has changed. For many jobs, the work can be performed where there is internet, not where the employer is located. Companies that resist this flexibility will continue to lose talent. 

Compensation is Creating Havoc 

Beyond the physical environment, we are seeing companies struggle with being competitive in the job market. Candidates are coming back and asking for more than employers can pay or asking for higher pay than was originally offered. While many people are getting these higher salaries, it’s creating havoc as it relates to compensation levels. Currently, candidates have the upper hand.  

Because companies are desperate not to lose people, they’re trying to find additional resources and pulling out all the stops, breaking a lot of their own rules, and paying hand over fist for people to stick around. Signing bonuses are great tools that we’re advising clients to consider if they can, potentially with stipulations.  

To start most years, employers tied their 2-3% salary increase levels benchmarked to the cost-of-living rate. In 2022, that won’t correlate. We are advising our clients to either consider increases above 4% or to develop a narrative to justify less. Employers who cannot provide a higher increase (e.g., above 3%) should look for other ways to invest in and reward their teams, such as bonuses, bonus plans that pay out quarterly or more, additional benefits, voluntary benefits, home office stipends, and others.  

We’re also recommending employers become familiar with the salary benchmarking tools candidates and employees are using to arrive at what they view as a competitive salary. Too often, employers aren’t aware of their content or, in some cases, their lack of validity. Additionally, employers who are counting on a fresh infusion of candidates in January, specifically, those wrapping up seasonal work, are instead likely to see few, if any, looking for work as those seasonal hires are converted to full-time hires.  

The first quarter of each year is the quarter with the most voluntary quits. Individuals usually resign after the first of the year because they were staying until a bonus was paid or they saw the salary increase or promotion they wanted. However, the first quarter of 2022 looks to be a record for quits.  

The bottom line is, there is no one solution. Employers need to improve how they embrace, reward, respect, and support their teams, or they will face a higher likelihood of an exodus. Employers hiring right now should expect to have to pay more, be more willing to meet candidates’ demands, and consume more time to find suitable hires. We are advising our clients to take a broad approach that considers all these strategies.  

If your organization is struggling with a talent shortage or other operational challenges, OperationsInc’s Executive Advisory Services can help. Our seasoned leaders collaborate with you and your team as an “on-call” expert, providing objective, customer-obsessed, neutral perspectives to help organizations navigate the road ahead. Contact us to get started.