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American Companies Pay Too Much for New Talent

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  • Nearly 25% of U.S. workers said they were looking for another job, marking a 7.6% increase from last quarter.
  • Only 43% of U.S. workers reported a "high intent" to stay at their current job.
  • Business confidence is up 2.6% from Gartner's report in Q4 2018.

Many factors lead employees to look for new employment, but an increase in compensation remains one of the top reasons why people seek out greener pastures. Because of this, employers offer pay increases to attract new talent. According to new data from Gartner, American employers may be overpaying new hires.

Earlier today, Gartner released its 1Q19 Global Talent Monitor, which estimates that while U.S. workers would be willing to change employers for a 10% pay increase, most employers offer an average increase of 15% to attract new talent.

Brian Kropp, group vice president in the Gartner HR practice, said that 5% difference can lead to more than just higher wages for newcomers. "Not only are U.S. employers often paying too much to new workers, but once tenured employees discover discrepancies between their salaries and those of new colleagues, they may be more inclined to look for another position elsewhere," said Kropp.

Drawn from Gartner's larger Global Labor Market Survey, which polls more than 40,000 employees in 40 countries on a quarterly basis, the Global Talent Monitor "reflects market conditions" of the previous quarter, officials said.

With better pay becoming a regular offering to new employees, it shouldn't be a surprise that Gartner's data also shows an increase in the number of American workers looking to switch jobs.

According to researchers, nearly 25% of American workers are actively looking for another job, marking a 7.6% uptick from last quarter. Despite the increase, officials said the American figure is still lower than the global average of 27%.

Officials said the report also found that just 43% of American employees reported a "high intent" to stay at their current job. While this number is a slight decrease from last quarter, researchers said it was "significantly higher than the global average of 33%."

Even though workers are looking for better job opportunities, Gartner's data shows that overall business confidence among U.S. employees has slightly increased since last quarter. According to the data, business confidence is up 2.6% in the U.S., while global figures have dropped by 1% in the same period.

While tariff threats from Washington against China have yet to impact business confidence, officials said changes on this front should be monitored carefully.

"Employee perceptions of the economy are primarily driven by how their company is financially performing, and what they gather from news cycles ... Companies need to proactively communicate with their employees about the current business plan and what will keep the organization successful," said Kropp. "By leading these conversations, employers can help diffuse any potential workplace issues that might lead valuable talent to go elsewhere."

As the current job market continues to favor workers, with a low unemployment rate and more job openings than people seeking work, employers must find ways to bring new talent into the fold. To that end, Gartner says employers should engage their employees by recognizing hard work and accomplishments.

The company also suggests that employers develop a strong employee value proposition (EVP) that focuses on things that the labor market values, such as benefits, career development opportunities and work-life balance.

"When companies invest and deliver a strong EVP, engagement levels in their workforce will likely see a boost – not only in the ability to retain talent, but also in attracting sought-after talent," Kropp said. "In this hypercompetitive U.S. labor market, organizations with attractive EVPs can reduce the compensation premium needed to attract qualified candidates, as well as potentially decrease annual employee turnover by just under 70%, all of which helps the company's bottom line and brand reputation."

Andrew Martins

Andrew Martins is an award-winning journalist with a Bachelor of Arts in journalism from Ramapo College of New Jersey. Before joining business.com and Business News Daily, he wrote for a regional publication and served as the managing editor for six weekly papers that spanned four counties. Currently, he is responsible for reviewing tax software and online fax services. He is a New Jersey native and a first-generation Portuguese American, and he has a penchant for the nerdy.