When the economy overheats and the cost of borrowing drops lower and lower, the inevitable starts to take place: money itself holds less value, and inflation begins to creep up. Before long, the pile of items that a hundred dollars once bought at a grocery store starts to shrink. And every individual price tag on a gallon of gas, a carton of milk, and a loaf of bread starts to rise more rapidly than the income stream that produced that purchasing power in the first place.
As it happens, the cost of an hour of employee labor also goes up during periods of inflation. And just as we can’t negotiate with the grocery story clerk over the price of bread, it gets harder to negotiate with an employee and convince them to accept a lower starting salary, a declined raise, a skipped bonus, or a skimpy benefits package. As inflation rises, employees simply expect more, and when jobs are plentiful and boom times are booming, the prevalence of other offers puts employers in a bit of a bind. In short: Employees are looking for more right now. If you can’t offer it, you’ll lose them.
Here are a few ways to navigate the choppy waters that lie ahead.
Ride the wave.
If it takes a little more to find and retain a great employee, accept this and roll with it. Offer more. You may lose money in the short term as you make higher bids for the very best candidates, but in the long run, you’ll get those candidates, and your competitors won’t. Don’t just keep pace with the market, get ahead and make an investment in your company’s future. If you want the best, pay for the best. You may even be locking great workers in (so to speak) at a rate that will only keep rising over the next few weeks and months.
Wait it out.
If you can’t keep up with a reckless and unpredictable surge in employee expectations, don’t try. Know your limits and stay put as long as you can without indulging in a hiring blitz. Take a look at each open position and look for short term alternatives to bringing on a new full-time employee. Could you consolidate three jobs into one? Could you make do with a temp position instead of full time? Could you redistribute the work among your current employees so everyone gives a little bit more and nobody gets burned out? Think it through and implement makeshift solutions until the market inevitably settles down.
Find a middle ground in between.
Offer more. But don’t do so blindly or you’ll end up on the losing end of your workplace relationships. Instead, get the support of seasoned staffing experts who can help you understand exactly what compensation is reasonable and what “market standard” means when the market is in a state of wild fluctuation.
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