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Nine out 10 business leaders are upsetting existing workers by using premium salaries to attract newcomers.
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Recruits lured by higher pay than loyal staff, says survey
01 November 2022
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10 minute read
Businesses are paying an average 19 per cent premium over existing salaries to compete for recruits, according to recruitment firm Robert Half, and the move is leaving loyal staff disgruntled.
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With 93 per cent of businesses admitting to paying over-the-odds, those in Queensland were found to offer the greatest premium on starting salaries with an average of 27 per cent while NSW was meanest at 11 per cent.
But the survey found that current staff were unhappy at the move, with two-thirds of business leaders reporting their employees were displeased over pay inequities with new hires.
Their disgruntlement was often rewarded, with almost three-quarters of businesses (72 per cent) giving rises to complainants.
“Talent shortages have put pressure on employers to offer new recruits higher pay in a bid to stay competitive in the market, but this response can stir concerns among workforces,” said David Jones, senior managing director at Robert Half Asia Pacific.
“Waiting for a tenured or loyal employee to identify and raise concerns over pay inequity before responding is likely to erode the trust, loyalty, and engagement of the employee at hand and creates the risk that they will already be halfway out the door before their concerns are addressed.”
Robert Half found that some companies were taking steps to avoid employee unrest such as:
- Conducting regular pay audits and adjusting existing employees’ pay to align with market rates
- Determining compensation based on talent and responsibilities rather than employee location
- Publishing salary ranges within new job postings
“Businesses that are serious about retaining their staff should be regularly benchmarking salaries across the organisation and maintaining a clear and transparent dialogue with each of their employees about their salary and role expectations,” said Mr Jones.
“Ensuring existing staff are rewarded at the same rate as new employees could significantly reduce the risk of losing crucial knowledge and experience to more competitive external offers.”
Robert Half found that remuneration remained an important factor for both those joining and remaining at businesses, with increasing inflation and cost of living the main factors.
It found that 38 per cent of office workers felt they were being underpaid while 31 per cent believed they were being paid less than new hires in a similar role.
“In addition to making sure salaries are both competitive and fair for all employees, employers should also look beyond remuneration for ways to attract and retain employees in a tight talent pool,” said Mr Jones.
“Companies would benefit from re-evaluating the entire employee experience to build talent acquisition and management strategies that satisfy employees’ personal and professional needs in a modern market.”
The survey was a part of a study developed by Robert Half that involved 300 hiring managers, including 100 CFOs and 100 CIOs from companies across Australia.
The firm also implemented a study that surveyed 1,019 office workers across Australia.
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