Defining the new equation in the world of work

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Australia faces a skills shortage at a level unmatched in our 46 years in recruitment in this market. This year’s newly released Hays Salary Guide shows that 91% of surveyed employers are experiencing a skills shortage. More than four in five (83%) say it will impact the effective operation or growth plans of their organisation, up from 64% last year.

This is the highest level of pressure we’ve recorded in the 43 years we’ve been producing our Hays Salary Guide. By comparison, our 2012 guide showed that skills shortages impacted operations for 69% of employers. In 2019, when skills shortages last peaked, they impacted 70%.

In such a market, the time has come for employers and employees to come together to define what the new equation in the world of work could look like. Employers and employees need to come together to find a solution that works, for the future of work.

Defining the new equation in the world of work

This new equation needs to consider the complete value exchange of any role. While a competitive salary is one part – and we share the latest salary trends below – productive and happy employees look for more than just the dollars. And sustainable, successful organisations have constraints to just how much they can pay their workforce. However, it’s not just the skills shortage that’s driving this need for a re-evaluation. The pandemic has changed all of us in some way. Whether that’s through a reflection of what’s important or grappling with the equivalent of 10 years of technology advancement in the workplace in just 12 short months – everyone’s trying to find a new equilibrium while trying to catch up and prepare for what our new futures could look like.

1. The value of salary increases is rising

A competitive salary offering is one key element in the value exchange between employers and employees. This year, salaries will climb in response to increasing skills shortages. According to our findings, 88% of employers intend to increase salaries when they next review, up from 67% last year. Of these, 10% will increase salaries above 6%, 27% will increase between 3% and 6%, and 51% will increase by up to 3%. But as we publish this guide, inflationary pressures and rate rises could further affect employers’ intent and employee expectations of what this value should be.

Employers cite the skills shortage as the main reason increases will be higher than planned. 34% say they’ve had to offer ‘substantially’ higher salaries, while 43% have offered ‘nominally’ higher salaries.

For their part, 84% of employees surveyed say their performance and the demand for their skills are the main reasons that warrant an increase of greater than 3%. No wonder then that an uncompetitive salary is the top factor motivating 49% of job searches. It ranks ahead of a lack of promotional opportunities (40%) and poor management or culture (37%).

While it’s important to offer a competitive salary, every organisation has an upper limit to their budget. When reviewing pay, consider the current state of the market and offer today’s typical salaries where you can. If a gap exists, engage directly with employees on bridging the divide to personalise an offering as much as possible.

2. The employee – your VIP customer

Organisations realise they need to be customer-focused, and the definition of customer now extends to your employees. In a time of acute skills shortages, we suggest that your employee should be treated as your most important customer and the employee experience needs close attention if you are to attract and retain the best.

This starts with benefits, which are already rising to attract staff. According to our survey respondents, training and over 20 days’ annual leave are the top benefits employees want. While 81% of employers offer training, only 23% offer additional annual leave, which presents an opportunity for any employer looking to differentiate their market offering.

Flexible working practices continue to evolve as well. Today, almost two-thirds (64%) of employees look for a flexible hybrid schedule rather than set in-office and work from home days. Over half want the option to choose the hours they work outside of core timings and one-third want compressed working weeks.

To elevate the employee experience, employers must also define and communicate their organisational purpose. We found that 51% of our respondents said they will only consider a role with an organisation whose purpose aligns with their own.

Communicating equity, diversity and inclusion (ED&I) and sustainability is important too – an organisation’s environmental policy is vital to 28% of employees while 34% say a strong ED&I policy is non-negotiable.

An organisation’s best asset is its people. By considering your employees as your VIP customer, you’ll be able to personalise the employee experience to tailor to individual needs and wants.

3. Lifelong learning is the new norm

Increasing digitisation, the speed of technological change and new ways of working now mean that lifelong learning is firmly on all agendas. By offering learning opportunities on the job, you can help bridge the talent shortage and build internal capability – in fact, 18% of employers say upskilling is their number one strategy to overcome the skills shortage.

Employers who offer skills development will also attract top talent. When considering a new role, 57% of employees say they look for training and 53% want ongoing learning and development.

By investing in skills development you’ll improve staff attraction and retention, ease skills shortages and future-proof your organisation.

4. Mastering change

Today’s world of work is evolving rapidly, and this volatility is not slowing down or going away. Simply adapting to change is no longer enough – today organisations that use constant change to their advantage will gain a competitive edge. To master change, agility must be embedded.

It’s little surprise then that one third of organisations have already undergone a workplace transformation in the past year, and this was after the huge changes organisations made during peak COVID-19 restrictions. Almost two-thirds of these (63%) changed their operational structure and almost half (49%) digitised workstreams.

For those with fully remote roles, 32% removed location requirements and say it’s less important that candidates live close to their workplace.

At the same time, directors are adapting their working styles – 67% say they need to find new ways to be effective and productive. 65% of managers reported performing tasks outside of their standard job description. Meanwhile, almost 70% of employees in large organisations say they are collaborating more and working with new teams.

Ultimately, mastering change starts with your teams. Embedding a growth mindset in your workforce can be achieved through formal learning courses and culturally through expressing expectations that change will be constant. By creating psychologically safe workspaces, employees can work towards adapting to change by trying new approaches, even if they fail.

Design your value exchange today

A competitive salary offering will always be a key part of the equation – but it’s not the full measure. Benefits, flexible working environments, opportunities to learn, alignment between personal and organisational purpose and mastering change are among the elements that form a successful attraction and retention strategy.

Download our Hays Salary Guide

Our Hays Salary Guide is based on a survey of over 4,400 organisations and 4,800 skilled professionals. Download your copy to access typical salaries and insights relevant to your organisation.

About this author

Nick Deligiannis, Managing Director, began working at Hays in 1993 and since then he has held a variety of consulting and management roles across the business. In 2004 he was appointed to the Hays Board of Directors. He was made Managing Director of Australia and New Zealand in 2012.

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Blogs

Defining the new equation in the world of work

Defining the new equation in the world of work

1. The value of salary increases is rising

2. The employee – your VIP customer

3. Lifelong learning is the new norm

4. Mastering change

Design your value exchange today

Download our Hays Salary Guide

About this author

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