Happy May Day
In the most recent Economic Research Institute (ERI) Quarterly newsletter, we hear something we have not heard much about in the news media, but which remains a critical point for employers to keep in mind.
Economic conditions are drastically affecting 2009 compensation administration. At the same time, the US is greatly increasing its money supply (restoring bank, auto, and insurance company losses, with these funds mainly hoarded). As soon as the economy turns around (and it will), this money will chase a finite amount of goods and services, the foremost being talented individuals’ skill sets. Stimulus conditions are creating “perfect storm conditions” for salary/wage inflation affecting those managing the pay of skilled individuals.
In fact, labor economists have warned of the impending shortage of educated, skilled workers to meet future demands. Long before this economic downturn, HR professionals in the U.S. were conferencing on how to attract and keep the best workers, and when we emerge from this period where there appears to be a flood of candidates to supply our needs, the backlash will likely shock our compensation systems. Organizations who hire a professional at a lower market rate today, because they can, should be prepared to accelerate pay in the future, or lose the high performer.
What strategy do we employ now?
1. Take steps to distinguish high performance and take care of your high performers. Know who they are and know what they are worth.
2. Be prepared to articulate why you will go to the wall for some, and not for others.
3. Gather quantitative and qualitative data on critical aspects of performance.
4. Set up feedback systems so people know how the organization is doing, and how they are contributing to the picture.
Final thought: When you watch a highly successful sports team, you may be drawn into the way in which the whole operation works, from the big picture strategy, down to the individual contributors. While you may be focused on outcomes, the big wins, the longer you follow the team and study the dynamics of the operation, the more you learn about how people are engaged with one another, the culture of the organization and most importantly the leaders at various levels of the operation. Every organization has roadblocks and problems, but from our armchairs we see something of the forces at play behind the success of our team. We need to apply the same interest and willingness to examine our own milieu.
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