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ARLINGTON, Va., June 11, 2019

Gartner Says Companies in the U.S. Are Overpaying To Attract New Talent

Gap Between Tenured and New Employees May Lead to More Job Vacancies

While compensation remains a top driver to attract and retain talent in the U.S., employees only expect about a 10% salary increase to switch employers, while companies are offering average compensation increases around 15%, according to a recent survey by Gartner, Inc.

The latest data from Gartner’s 1Q19 Global Talent Monitor shows that while many U.S. employers continue to extend lucrative compensation offers to persuade workers to switch companies, the premiums to attract talent might not be as high as employers think.

“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 Brian Kropp, group vice president in the Gartner HR practice.

Coinciding with employers’ generous compensation offers to attract talent is the rise in the number of U.S. employees actively seeking other employment. Gartner’s 1Q19 Global Talent Monitor reflected that almost 25% of U.S. workers were actively looking for another job, a 7.6% increase from last quarter but still lower than the global average of 27%. The report also found that only 43% of U.S. workers expressed a high intent to stay with their current employers, a slight decrease from 4Q18 but significantly higher than the global average of 33%.

Business Confidence Is Up, For Now

The 1Q19 Global Talent Monitor reflects a slight 2.6% increase in business confidence among U.S. employees from 4Q18, while the global average dropped 1% during the same period. While the recent tariff discussions are not yet impacting business confidence, this is an area for employers to watch.

“Employee perceptions of the economy are primarily driven by how their company is financially performing, and what they gather from news cycles, which can lead to gossip and uncertainty if the employer isn’t actively taking part in this inevitable dialogue,” said Mr. Kropp. “Companies need to proactively communicate with their employees about the current business plan and what will keep the organization successful. By leading these conversations, employers can help diffuse any potential workplace issues that might lead valuable talent to go elsewhere.”

Workplace Strategies to Attract and Retain Talent

As the U.S. labor market remains tight with unemployment near all-time lows and more job openings than job seekers, employers need to ensure they are engaging their workers, by acknowledging hard work and accomplishments and delivering the rewards that are most prized.

To establish the best chances for workplace success, Gartner recommends companies develop a strong Employee Value Proposition (EVP) that concentrates on key categories that employees and the labor market identify as valuable when working for an organization, including competitive benefits and compensation, career and development opportunities, job-interest alignment 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,” Mr. Kropp added. “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.”

Global Talent Monitor data is drawn from the larger Gartner Global Labor Market Survey that is sourced from more than 40,000 employees in 40 countries. The survey is conducted quarterly and is reflective of market conditions during the quarter preceding publication.

 

About Gartner ReimagineHR

Gartner experts will provide additional insight into the labor and talent issues at the Gartner ReimagineHR Conference, taking place October 28-30 in Florida. Gartner ReimagineHR is the premier event for HR leaders around the world. Join Gartner and senior HR executives to hear key insights and learn actionable strategies necessary to support organizational performance. Gartner ReimagineHR will also be held August 6-7 in Sydney, and September 18-19 in London. Follow news and updates from these events on Twitter using #GartnerHR.

About Gartner for HR Leaders

Gartner for HR Leaders brings together the best, relevant content approaches across Gartner to offer individual decision makers strategic business advice on the mission-critical priorities that cut across the HR function. Additional information is available at http://www.gartner.com/en/human-resources/human-resources-leaders.

 

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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