IN AN ever-shrinking labour market, Australian employers are risking potential future growth if they don’t become smarter in how they spend their reward dollars, recent research has found.
Attraction and retention of key talent remains the top priority for Australian employers, but simply throwing money at the problem is not necessarily the best or most sustainable solution.
Businesses are waking up to the necessity to focus reward increases into the roles that will have the greatest impact and not simply across the board, according to Ken Gilbert, business leader of human capital advisory services for Mercer, which conducted the research into more than 300 organisations.
“We’re being told that business capacity is being constrained by an inability to attract suitably qualified staff, which can result in failure to execute growth plans; failure to deliver on business objectives; and increased cost in attracting and retaining suitable people,” he said.
The research found that attraction and retention of key talent remains a top priority for 99 per cent of employers, irrespective of their size, industry or performance.
In the future, Gilbert said businesses could expect at least a 20 per cent drop in the number of businesses that will opt to simply buy talent as their main solution to attracting and retaining key people. In addition, more than 25 per cent will opt to build it internally and 64 per cent will implement a balance – up from only 59 per cent that currently prefer a balance of buying and building.
“What we’re saying to businesses is that to continue to compete for talent, and for business growth, they have to understand the areas of their workforce that are critical to delivering success and align their rewards strategy with these areas,” he said.
Phil Minns, a principal with Mercer, said organisations need to broaden their reward strategy as the talent shortage becomes more acute on a global scale.
As such, employers that have values and behaviours frameworks in place have an opportunity to make these real and tangible through packages that encompass good remuneration and benefits, flexibility and potential for career growth.
“Stand back and take a more strategic and long-term view. Stop adding on ad hoc pieces here and there to your remuneration strategy, and see whether it appropriately differentiates and focuses on the critical talent and occupations that will drive value in the future.”