U.S. companies experiencing increased rivalry for top talent are relying almost entirely on monetary means to attract and retain key employees. But as their costs escalate, is money still the main motivation for the new breed of worker?
A survey of 115 companies by Capital H Group, a human capital consulting firm, found that more than half (55 per cent) of the companies said their greatest challenge in recruiting top talent is a small pool of qualified candidates.
Half said that they plan to increase their workforce over the next six months and more than one in five (22 per cent) also project they will lose between one in 10 and one in four of their top performers to retirement over the next five years.
Compounding the issue, these companies are competing to hire and retain the same type of employees, with salaried non-management positions - such as accountants, engineers, and IT professionals - ranking highest on the list.
Costs are also being driven higher as the most popular method used to attract top candidates, cited by more than eight out of 10 respondents, is offering competitive salaries and rewards.
When asked how they keep top performers engaged in their work, eight out of 10 companies again cited monetary awards. Not surprisingly, more than half (55 per cent) also said that recruiting top candidates is more expensive than only 12 months ago.
But are employers they missing the mark? While the survey focussed only on monetary issues, other evidence suggests a growing disillusionment with corporate life and with it, the increasing ineffectiveness of traditional recruitment and retention methods.
Recent research by Kelly Services found that a growing proportion of Americans are choosing to reject conventional 9-5 employment and work for themselves.
These free agents people who freelance, work on a contract or temporary basis or act as independent consultants now make up almost a quarter of the U.S. workforce.
What's more, almost nine out of 10 say they are "extremely or somewhat satisfied" with their current overall employment and work-life balance situation a far higher proportion than the average employee.
The overwhelming message that emerges from the Kelly Services research is that Americans be they employed workers, retiring workers, workers re-entering the workforce after retirement, as well as the unemployed or those seeking employment want less stress, better work-life balance, improved relationship with company management, job security and assurance of continued work.
In other words, firms who still think that attracting talent is simply a matter of writing a bigger chequer are going to find themselves with empty desk space.
To make matters worse, the Capital H Group survey found that while companies may recognize the urgency of improving their ability to attract top candidates, more than a quarter (27 per cent) who say it is among their company's top three "people issues" have not yet dedicated plans or resources to it.
A third of those who say that their ability to identify and engage top employees is a priority also said they have no plans or resources in place to tackle the issue.
"As these trends reminiscent of the late 1990s labour market slowly start to re-emerge, our survey shows that many companies may be ill-prepared to deal with them," said Dan Weinfurter, CEO of Capital H Group.
"While few, if any, companies can sit on the sidelines in this competition for top talent, throwing money alone at this issue will only make it worse. As a first step, companies must seek to understand what talent is required to drive their business strategy and plan accordingly."