Compensation Gap Widens Between Companies, Workers

The latest findings from a survey conducted by recruitment consultancy Robert Walters Inc. highlighted a widening gap between employee expectations and what companies are prepared to offer in terms of salary, benefits and overall support. Meanwhile, there is also a growing disconnect between employees’ remote and in-office expectations and what employers are willing to offer, according to separate research and a workplace staffing expert.

Only 16% of employees feel their compensation fully reflects their qualifications, according to the Robert Walter survey group of 3,000 professionals. Beyond pay, many workers feel under-resourced in their roles, with 53% reporting they do not have the staffing or resources necessary to perform their jobs effectively.

To maximize the impact of benefits and to stand out in the employment offer, Sean Puddle, Robert Walters New York’s managing director, recommends employers ensure their 401(k) offerings include competitive company matching contributions, customizable plan options and employer-funded contribution.

“401(k) benefits are increasingly seen as a standard part of a competitive benefits package,” says Puddle. “However, they can still be a powerful tool in attracting and retaining top talent if they are well-designed and communicated effectively.”

When dealing with a younger workforce or situations in which 401(k) benefits are just part of baseline expectations, employers should consider pairing them with other benefits that align with their workforce’s needs and preferences, suggests Puddle. Such benefits can include a wider compensation package, career development opportunities, company culture, wellness programs or flexible work arrangements.

“Communication and education are also key,” he says. “Employers who effectively communicate the benefits of a 401(k) and provide education on the importance of retirement planning can turn a standard offering into a more compelling incentive.”

Budget Constraints

The Robert Walters report also pointed to significant challenges on the employer side of the equation, particularly concerning budget constraints. Financial pressures have forced 71% of U.S. employers to hire underqualified candidates who may lack the necessary skills or experience for their positions, according to a panel of more than 500 employers.

Nearly half (48%) of that group cited budget limitations as the primary reason for their inability to attract the right talent, while 70% acknowledged that their compensation packages are not competitive in the current market.

As a result, many companies are finding themselves in a bind, the consultants noted. While 81% of employers recognize the need to hire better-qualified candidates to alleviate burnout and improve employee morale, the budget to do so is not available. Instead, some 37% of businesses are opting to invest in training programs to help underqualified new hires develop necessary skills.

This reliance on less-experienced employees is having a direct impact on workplace culture. In responding to the survey, 80% of current employees reported increased stress levels due to the influx of unqualified new hires. In many cases, these hires require additional time and resources diverted from their colleagues to get up to speed, placing an added burden on already overstretched teams, according to the survey.

Recruitment budget is also making it harder to get employees back to the office after a surge in remote work during the pandemic. Employees with experience working remotely are asking for an average of a 31% increase in salary to return to a fully in-office work environment, according to a separate study published by staffing firm Howdy, which polled only employees who self-identified as hybrid or remote workers. Additionally, the report found those employees are willing to accept on average a $7,728 pay cut to maintain their remote work lifestyle. 

Return-to-Office

Offering money as an incentive to return to the office is not a realistic option for many companies, notes Christina Cavalli, the chief human resources officer at Docupace. She says HR professionals should try to create experiences that are collaborative and worthwhile.

“From team meals to skills training, look to introduce activities that are motivating and encourage strengthening trust and team building,” she says. “Sometimes, just giving people meaningful reasons to be in the office, like a creative team session or networking with leadership, makes a big difference too.”

Cavalli recommends a hybrid work policy to offer employees more flexibility, a tactic implemented by many companies after the pandemic. However, Howdy’s study found that the mix of remote and in-office work isn’t a popular alternative for many workers. 

A majority of hybrid and remote employees (68%) preferred to work fully remote, with only 20% opting for a remote-first hybrid setup. Just 11% of hybrid and remote employees were satisfied with a traditional hybrid model, and a mere 1% wanted to be fully in-office.

Meanwhile, Howdy found that companies have steered away from hiring for remote positions, as 29% reported difficulty hiring quality remote workers in the U.S.

If companies must stick to recruiting for remote positions, hiring managers can start by refining the recruitment process, says Cavalli. She suggests advertising on specialized remote job boards and focusing on candidates with proven remote experience. 

“It’s important to look for people with strong communication and time management skills,” she says. “Also, setting remote employees up for success through solid onboarding and regular support can make a big difference.”

The findings from Robert Walters drew responses from 3,000 professionals, including both employers and white-collar employees, in July. Howdy’s report was conducted in June, surveying 502 employees who self-identified as either hybrid or remote workers.