The quest to understand how businesses are competing in the market for jobs would be a lot easier if you had a crystal ball. It is no easy feat to understand the invisible influencers that impact what you should pay employees, how to recruit top talent and retain employees. We all know we are competing in the ‘market,’ but how do you define what the market is? Simply put – the labor or talent market is a data set compiled based on specific identifiers (geographic location, industry, average size of organization, organization type, etc.) in order to provide an analysis of compensation trends and wages. The data should provide insight into jobs that are in demand and a meaningful understanding of how those jobs are being compensated.
Effective pay decisions come from strategic market research – numbers based on facts not feelings. The world of work is constantly changing, and the driving force behind what to pay employees should push you to seek out the crystal ball that will help you understand and quantify – what is market for my jobs?
Effective pay decisions come from strategic market research - facts not feelings! #TalentMarkets
Your company should be thinking about competitive wages in the market because your employees certainly are. In our increasing connected world, employees are more aware than ever of how their skills can translate across multiple business sectors. Compensation is one of the main drivers that motivates people to leave an organization. Employees will be shopping around at multiple stages in their career for a better salary and benefits package.
Here at PayScale, we know developing a talent market strategy matters. Whether you’re engaged in the recruitment cycle, benefits administration or on the Executive board, there are a number of factors to examine when defining your competitive labor market. While you might not have all of the answers, it is important for you to guide the conversation internally. Consider who to involve, what is the plan of action, and possibly some of the other questions below.
Business Executive – Anyone is this capacity should be involved in the planning of the labor market because it is a business strategy and your workforce is the biggest spend – it takes thoughtful and definite buy-in from all stakeholders.
- How competitive do you want to be relative to the market? Do you want to lead or exceed what other businesses are paying?
- What is the compensation philosophy of the organization?
- What is the projected growth of the organization over the next year?
- Are there a variety of industries or business segments that might impact the workforce?
- Is there a dominant player in your area? How large are the organizations you tend to compete with for talent?
Department Managers – This role should be involved in developing a compensation market strategy because the strategy forwards a business decision about how to prioritize pay for specific jobs and employees that managers are responsible for.
- When recruiting, what is the profile of a top candidate?
- Do you have hot jobs that you’re struggling to fill?
- Are there any positions where employees have voice repeated concerns about underpayment?
- How do you want to prioritize your compensation budget?
- How aggressively do they want to target the market, or what percentile of the market are they looking to pay?
HR Leader – The responsibility of understanding the business strategy and compensation philosophy falls on these capable shoulders, along with things like appropriately segmenting the workforce, retaining top performers, and covering the fuzzy line where compliance meets competition. Here are some things to keep in the back of your mind:
- What is the projected growth for the company?
- What can the company afford to pay employees? What is considered a fair wage?
- What analytics are you tracking related to organizational priorities?
- What are the big industries in your area?
- Are there major upcoming organizational initiatives to consider?
Manager, Functional HR – You have your pulse on the people in your organization. From talent acquisition to people management, it is important to understand how the market impacts your day to day.
- Which positions are hard to fill?
- Which jobs have a higher internal equity?
- Have you noticed turn over in particular departments?
- Where did your most recent new hire come from?
- Is the company able to attract and retain top talent?
Compensation Professional – Numbers and data, data and numbers. Taking the time with a comp professional to analyze the market data can be a fruitful way to further reveal what the talent landscape looks like for your jobs.
- What are the statistics driving the organization? (i.e. revenue growth, YOY projections, etc.)
- Are there any industry market trends that are impacting jobs nationally or locally?
At the end of the day, all of these questions become markets to explore as you start to define your talent market strategy. What lessons or questions have been particularly helpful for you as you’ve identified the right markets for your jobs? Let us know below.