11 December 2007

Are we willing to match an offer from a competitor firm to retain a key employee?

"A key employee has just presented his business manager with a job offer for significantly higher pay from a competitor firm. The threatened departure of the employee catches the business manager by surprise. Alarmed, the business manager contacts the human resource manager seeking to counter the external recruitment effort. An impassioned plea is made to authorize an exceptional pay package to match the offer. Under pressure and constrained for time, the human resource manager accedes to the business manager’s request, retaining the employee and in the process undermines the integrity of the company’s overall pay policy and practice."

As practitioners, we encounter a dilemma when the extension of a counteroffer is necessary to retain key employees. On one hand, we are reluctant to participate in an upward pay spiral by matching competitors’ offers with counteroffers. On the other hand, the bidding may be justified when the potential contributions and/or the difficulty of replacing the employee are great. In addition, matching offers of competitor firms promulgate a 'greed is good' culture whereby opportunistic employees solicit bids from competitor firms to extort higher pay from the company.

Simply aligning employee pay rates with the market median rates may not be sufficient to keep the headhunters at bay. Also, it would be naïve to presume that adherence to a market median, or an upper quartile pay practice should automatically translates into employee retention.

It is time to focus on market pricing of jobs and institute retention tactics in anticipation of the prospect of employees receiving job offers from competitor firms. Regardless of perceived pay equity challenges, market pricing of jobs is individual centric.

In anticipation of competitive bids in the war for talented people, should we offer key employees salaries commensurate with the alternative jobs (real or hypothetical) they could hold, or can we afford not to?

A recent employment outlook survey suggests that the "barbarians are already at the gates" ...

__________________________

Employers see strong hiring in Q1 next year: survey
Business Times Singapore, 11 December 2007
By Chow Penn Nee
(c) 2007 Singapore Press Holdings Limited

THE hunt for talent shows no signs of abating, as Singapore employers will actively recruit qualified staff from January to March next year, according to a quarterly survey measuring employers' intentions to hire or fire employees.

Conducted by US-based Manpower Inc, the Manpower Employment Outlook Survey polled 52,000 public and private companies in 27 countries.

Of the 736 employers polled in Singapore, net employment outlook - the percentage of employers looking to hire minus those expecting a decrease in employment - was 51 per cent. This indicates that employers throughout Singapore will continue to hire at a vigorous pace, said Manpower. This is nine percentage points higher than in the fourth quarter of 2007.

Forty-five per cent of employers said they expect to hire more people during the first quarter of 2008, while 2 per cent expect to reduce staffing levels, and 24 per cent report no change in hiring intentions.

C K Goh Rosa, country manager of Manpower Singapore, noted that job seekers are more selective with job offers and are more demanding in negotiating salary packages. 'With the consistently strong hiring outlook, we may see a continuous trend of rising salary packages to attract and retain talent. This will drive up operating costs and is a source of concern for most companies.'

She added: 'It will be a good time to invest in training the mature workforce to narrow the gap of talent shortages.'

Employers in the public administration and education sector report the strongest hiring outlook of 70 per cent, which is a marked increase from the previous quarter, and from a year ago. The finance, insurance and real estate sector was the second strongest with a net outlook of 67 per cent, a slight drop from the previous quarter, and a fall from a year ago.

The mining and construction sector was the third strongest in hiring outlook, with 59 per cent, up from a quarter ago, but a drop year-on-year. Employers in the wholesale and retail trade sector report the slowest hiring pace with an outlook of 33 per cent, higher than a quarter ago but a fall from the previous year.

'The sharp increase in the public administration and education sector outlook is likely due to the increase in enrolments in training institutions and learning centres in Singapore,' said Ms Goh Rosa. 'More people are looking to invest in personal advancement and marketability. We are seeing signs of companies sending their mature employees to courses to improve their skill sets and knowledge in an effort to extend their employment.'

In the Asia-Pacific, hiring activity is expected to be positive, but employers in Australia, China, Japan, New Zealand, Singapore and Taiwan show a slower pace of hiring from a year ago. On a quarterly basis, however, net employment outlook improved in China, Hong Kong, Singapore and Taiwan.

Globally, the strongest first quarter hiring expectations were reported in Peru, Singapore, India, Argentina, Costa Rica, Hong Kong and South Africa. Employers in Ireland reported the least optimistic hiring plans.

No comments: