As recruiters, we often get asked what employers can do when their hands are tied on compensation and increases aren’t possible – whether it’s based on their sector, budget or agreements in place.
Sometimes, it’s simply not an option to pay more.
And that poses a challenge in today’s market, with rising inflation, a looming recession, record-low unemployment and a persistent shortage of workers to fill Canada’s ~1 million open roles. Add it all up and it points to an employee’s market – where salaries are on the rise and employees are in search of higher pay.
According to a recent survey by Eckler, in 2023, Canadian employers are projecting the highest salary increase in two decades, at an average of 4.2%.
Ideas to consider when you can’t pay more
If you can’t compete on salary, here are some other ways of attracting and retaining talent in today’s market.
Learning and development
Personal and professional growth are very important to many candidates. In fact, Gallup found that the No. 1 reason people change jobs is for career growth opportunities.
And a Monster survey of Gen Z job seekers found that 37% said they want to see advancement opportunities right in the job ad, while 30% said they look for career or leadership development opportunities.
The same Gallup survey found it’s not just important for hiring but also retaining talent. The survey found that:
- Employees will leave companies that don’t provide professional development opportunities and flock to companies that do.
- 57% of U.S. workers want to update their skills and 48% would consider switching jobs to do it.
- Workers aged 18 to 24 consider upskilling a more important benefit than retirement, sick leave, parental leave, life insurance and vacation.
- More than half (53%) of workers aged 55 and older said upskilling is “very” or “extremely” important.
So, my advice to employers is to clearly present the career potential to candidates and ensure they know you want them to grow with your organization long term. Highlight in your ad and in interviews the growth opportunities available.
I would also recommend formalizing a coaching and mentorship plan, especially in a remote or hybrid workplace as it not only fosters career growth and improves performance, but also helps build solid relationships, which are so critical in a healthy workplace.
Finally, don’t forget the importance of a good job title—it might even be the carrot that helps the candidate choose your job over another.
I know we talk a lot about the second-biggest elephant in the room (after compensation), flexibility, but it bears repeating because it’s such a big driver of employment interest. It comes in many forms – flexible work hours, workdays and work location.
There are countless surveys pointing to how important flexibility is to many of today’s employees. When we surveyed our own team about their preferred total rewards, “the ability to work remotely and have flexibility” topped the list at 36%, followed by compensation at 30%.
And since flexible work location and hours are two ways an employer can retain and motivate at a low cost, I encourage employers to dig deep and see if they can stretch, even a little.
Get creative with compensation
Maybe you’re in a tight squeeze at the moment and can’t pay more. How about later? Some of our clients are offering different kinds of bonuses to their top performers—deferred, retention or milestone incentives—signalling how much they value their employees.
And at a time when the cost of living is soaring and many employees are being called back to onsite work, consider offsetting the costs of transportation (i.e., gas, transit passes or a Bike Share allowance) or offering support for parking.
Get creative with time
We all know time is money, so how about offering more paid time off, free time, additional vacation days and more extensive paid health leave? If you can offer an extra week of vacation or additional sick leave, including time off to spend with sick kids, do it!
Build good leadership
You’ve no doubt read the research—people don’t quit jobs, they quit managers. According to the 2021 People Management Report, of those who said they have a bad manager, 63% were considering quitting in the next year (vs. 27% with a good manager).
So, I recommend developing your leadership, encouraging empathy and understanding, and fostering a coaching mindset. Gallup says it takes more than a 20% pay raise to lure most employees away from a good manager, so take the time to develop your leaders to be competent and kind, to help others lift their skills and careers.
Highlight your organizational purpose
Many employees seek roles that align with their own goals and life vision, especially post-pandemic.
According to McKinsey, nearly two-thirds of US-based employees surveyed said the pandemic caused them to reflect on their purpose in life, with nearly half reporting they were reconsidering the kind of work they do because of the pandemic. These sentiments were especially true of millennials, who were three times more likely than others to say that they were reevaluating work.
So, don’t be shy about demonstrating the important work you do—and the fulfillment the candidate will derive from it—from the ad to the interview and in the offer itself. And don’t stop there. During our onboarding, we aim for a 50-50 split of content that will inspire and content that will teach, highlighting to new hires throughout their training why their work matters and showing them why the work of our company matters.
It’s not just about compensation. Many employers forget to sell their total offering—or Total Rewards—but if you can offer benefits like maternity leave top-ups, RSP matching and vision care, brag about it! Share your whole package, including any supports for mental health, because these benefits might just be the thing that sways a candidate in your favour.
The importance of stability
With ongoing reports of a looming recession and news of mass layoffs, particularly in the tech sector, many employees are understandably jittery, especially those who were hired within the past year and lack seniority. If you’re a stable, established organization, that counts. Don’t underestimate the power of job security. Many employees choose to stay in companies where they feel a sense of stability.
Finally, be proud, open and real. Why is your organization a great place to work? Shout it from the rooftops!