U.S. companies are offering lower pay increases to attract new employees, while the number of people looking to change jobs has declined, according to new findings from IT consulting and research firm Gartner.
The average pay increase to help persuade workers to switch jobs has declined in the past six months from 15 percent to 13 percent, according to Stamford-based Gartner’s Global Talent Monitor for the 2019 third quarter, which draws from survey data of nearly 30,000 employees across 40 countries and regions.
Only one-third of employed U.S. workers said they were actively looking for a new position in the third quarter, compared with a global average of 40 percent, according to Gartner. The U.S. rate has dropped from a high of 41 percent in the first quarter of 2019, while the international average has remained steady during the same period.
For the second consecutive quarter, 51 percent of U.S. workers said they planned to stay with their current employer, compared with an international average of nearly 40 percent.
“The dramatic decline in active job seeking that we witnessed in the second quarter did not rebound much in the third quarter, even as employee business confidence and perceptions of the job market remained stable,” Brian Kropp, chief of research for the Gartner HR practice, said in a statement. “This coupled with companies paying less to entice workers to switch jobs demonstrates additional signs of a tighter U.S. labor market from both the employer and employee perspectives.”
Since the first quarter of 2018, compensation has ranked as the top reason why American employees leave their companies — a trend that continued in the past quarter, Gartner officials said. Career opportunities and “people management” came in as the second and third reasons why workers moved on.
“Faced with less than ideal compensation increases, U.S. workers are looking for other benefits and value they can extract from their jobs,” Kropp said. “Gartner data shows that even if wage increases remain low, workers will stay on with companies that develop programs which enhance their skills and invest in their professional growth within the company.”
Recruiting qualified professionals remains a challenge for many companies, with the national unemployment rate running at a 50-year low of 3.5 percent. There are “more jobs openings than there are people to fill them,” according to Gartner.
Gartner officials said companies can differentiate themselves in the labor market by developing a strong “employee value proposition” that focuses on workplace factors that employees care about — a list that includes compensation and benefits, personal development, corporate culture and work-life balance.
Robust EVPs can decrease annual employee turnover by nearly 70 percent and increase new hires’ commitment by nearly 30 percent, according to Gartner.
In the third quarter, 21 percent of U.S. workers reported “high discretionary effort,” which refers to going above and beyond their regular duties. The rate was unchanged from the previous quarter, but higher than the global average of 17 percent.
“Talent is a company’s greatest asset and employees the greatest advocates,” Kropp said. “Developing a compelling EVP that shows true dedication to their workforce’s wants and needs enables companies to boost employee engagement.”