Compensation tips to attract, retain talent amid tough labour market

Failure to act means companies could find themselves at a strategic and operational disadvantage, warns HR leader

Compensation tips to attract, retain talent amid tough labour market

With inflation, competition, and emerging employee demands, HR is in a difficult position when it comes to retaining and finding the right people for their organisation.

Tony Guadagni, senior principal in the Gartner HR practice, said that many organisations are even taking a "less competitive approach to compensation" while waiting for the labour market to cool down.

"Yet, these organisations will find themselves at a significant strategic and operational disadvantage if demand continues as anticipated – especially as other employers offer higher base pay salaries."

So, how can HR be successful in hiring and ensuring that staff won't be leaving them for other opportunities?

Gartner made these four recommendations to HR to help them remain afloat amid the shifting world of work.

1. Increase compensation and benefits. This is the primary way for employers to attract and retain talent. However, Gartner noted that while the approach helps roles to be filled immediately, it can still be "costly and temporary."

Instead, Gartner said HR should be open to other alternatives, including the following:

  • Providing substantial signing bonuses. Gartner said it is an opportunity to "incentivise candidates more quickly and address immediate talent gaps."
  • Offer lucrative benefits. This includes tuition reimbursement or retention bonuses to establish lasting differentiator in the market and ensure long-term commitment from staff.
  • Decouple pay and location. This is a suggestion for organisations implementing remote and hybrid work.

2. Pay with time. If employers do not want to compete in terms of compensation, they may pay employees with a time - a growing tactic among organisations. This means granting employees with work schedules that offer greater work-life balance, according to Gartner.

"Employers can also embrace radical flexibility, giving employees control over where, when, and how much they work," it suggested.

If not, Gartner recommended adjusting the compensation for the hours worked with full benefits, which it said can provide long-term advantages.

Read more: Salary vs employee benefits: which is better to offer?

3. Invest in internal mobility. This means accelerating internal promotions to retain competitiveness, according to Gartner, as some employees' focus on career progression might have declined because of attractive pay offers.

"HR leaders must accelerate internal promotions and backfill lower-level vacancies from the external labour market," said Guadagni. "Adopting an organisational preference for internal mobility supports retention of key talent and reduces the time to fill for critical roles – lowering stressors for the rest of the organisation."

4. Widen talent pools. HR is advised to consider candidates from "unconventional backgrounds" who might be seeking a new career path.

"Organisations should re-evaluate qualified talent and predictors of long-term success, including skills adjacencies, reducing or eliminating education requirements or location requirements," Gartner advised.

Recent articles & video

'There are a number of benefits that come from doing wellbeing well'

FWC finds early notice of end to fixed-term contract amounts to dismissal

Nearly 9 in 10 Australian employers concerned about finding top talent

SafeWork NSW announces more compliance checks for psychological safety

Most Read Articles

Queensland resolves dispute on long service leave entitlements

From full-time to casual: 'Struggling' employer converts worker's role without consent

Fired for 'verbally abusing' manager? Worker cries unfair dismissal amid health issues