A common question we hear from our clients these days is why salary expectations continue to accelerate despite rising economic inflation. Rent, groceries and gas prices are skyrocketing, and workers expect their employers to raise salaries accordingly.

Even though non-monetary incentives exist that can attract high performers to your organization, at the end of the day, money talks. So, when it comes to recruiting top talent, what should employers do?

How Inflation Influences Salary Negotiations

Employees are seeking increasingly higher salaries because of such unprecedented inflation, and it's having a significant effect on recruitment. In addition, a tight labor market, the "Great Resignation" and workers getting the “itch to switch” companies appear to be adding fuel to the fire. It's evident in our conversations with clients that they must rapidly adjust their expectations regarding the cost of acquiring top talent in this tumultuous hiring environment.

How Job Mobility Is Affecting Salary Negotiations

Another trend emerging in the recruiting world is increased worker mobility. Several reasons contribute to workers looking for remote work options, including the ability to live in a low-cost area or become a "digital nomad," embracing a lifestyle that allows them to work remotely and live anywhere — whether that means working from home or traveling the world.

In addition to candidates' desire for flexibility, companies offering fully remote positions may also use this as leverage to encourage their employees to reside in areas with a lower cost of living.

Advice to Employers

As employers navigate a crazy labor market, rising inflation and talks of a recession, our biggest recommendation is to be flexible and realistic in building a desirable compensation package:

• Compensation is typically the biggest motivating factor in attracting top talent.
• Offering flexible or fully remote positions can be a significant incentive to workers.
• You can make your offer more appealing by including other forms of non-monetary compensation/incentives, such as offering extra time off or extensive training plans.

We're Here to Help

Developing an attractive compensation package in a tight labor market is just one of the ways we help our clients attract, recruit and reward top talent. Want to learn more? Connect with us today.