Market fears push salaries up by more than 11% across tech and finance

After a tumultuous period, increasing headcount and new job opportunities are back on the agenda for most Australian companies. In announcing the newly released 2022 Salary Guide, new independent research by specialised recruiter Robert Half highlights that specialised professionals with in-demand skills can achieve above-market wage growth in a market where nearly nine in 10 (86%) employers are concerned about valued team members leaving for new opportunities this year.

Robert Half research reveals that existing employees in finance, technology, and business support who are eligible for a pay rise can expect an average increase of 11.4%. This is more than 9% above the forecast national annual wage growth of 2.3%[1], highlighting the extensive bargaining power of skilled talent this year.

The forces behind rising turnover

As companies compete for in-demand skills in a tight talent pool, the survey by Robert Half shows three-quarters (75%) of business leaders think turnover will increase this year compared to pre-pandemic conditions. Only 19% think turnover will remain the same and just 5% believe turnover will decline while 1% are unsure.

When asked about the main reason for rising turnover in 2022, almost three in 10 (29%) employers point to a lack of flexibility and work-life balance. Another 27% identify limited opportunities for career growth and advancement, followed by 18% who list inadequate salary and benefits as the main reason for increased staff turnover.

Remuneration to drive retention

The majority (80%) of employers are planning to award salary increases this year as a means to retain existing employees. While nearly half (46%) of business leaders say they are planning to increase salaries for all employees in finance, tech, and business support, just over one-third (34%) say they are only planning to increase salaries for their top performers. Of those expecting to receive a pay rise, employers plan to award an average increase of 11%, significantly higher than the expected national wage growth. Only a minority of employers (14%) are not planning to raise salaries in 2022. Three-quarters (76%) of employers also expect end-of-year bonuses to increase in the coming year.

Top retention strategies

While offering competitive salaries is recognised as crucial to minimising the risks of high turnover in 2022, increasing compensation is only part of a swathe of new tactics taking aim at retaining top talent in the year ahead. With flexibility being cited as the number one reason for the rising turnover, work-life balance benefits have become a must-have for most employees in today’s market and most companies are actively taking steps to meet those demands.

More than half (55%) of Australian employers are focused on offering flexibility and work-life balance through remote work arrangements and 48% will allow employees to autonomously set their own work hours. As companies fast track ambitious growth strategies, employee workloads are expanding so almost half (48%) of employers are mitigating the strain on their existing team by hiring contract professionals to alleviate workloads. Employers are also focusing on career pathing through the acceleration of promotions and job title changes (45%) alongside professional development (39%).

The Robert Half survey asked Australian business leaders what steps they are taking to help retain employees (aside from increasing remuneration).

Independent survey commissioned by Robert Half among 300 business leaders in Australia – multiple answers allowed.

“Employers in 2022 have reason to be concerned about losing employees this year. In stark contrast to the past few years of stagnancy, skilled talent are actively being poached by competing organisations and have multiple job offers with generous salary packages from businesses who are undertaking exciting growth initiatives. It is one of the most fruitful times to be a jobseeker in recent years, and employees are aware of their bargaining power, so that will translate into a higher rate of job switching,” said David Jones, Senior Managing Director Robert Half Asia Pacific in announcing Robert Half’s 2022 Salary Guide.

“Employers looking to retain their top talent will be under pressure to financially incentivise loyalty or risk an exodus of tenured knowledge. Remuneration will be a key driver behind whether an employee chooses to remain with an employer – perhaps more so this year than pre-pandemic – because inflation is high, yet national wage growth is low, so employees who remain with a company without a pay increase are ultimately going backwards,” added Jones.

“Businesses must navigate 2022 with a dynamic ‘always on’ approach to employee retention, working on the basis that their top performers are the most likely to be poached by competitors. Alongside salaries, businesses will also need to bolster retention efforts through clear career development pathways, offering competitive bonuses, and heeding demands for flexible working arrangements,” concluded Jones. 

Robert Half has outlined 3 tips for employees looking to secure a pay rise:

1. Evaluate your own performance: Before entering discussions, prepare a business case which outlines your unique skills how these have been demonstrated to date, the value you contribute to the organisation, and any positive feedback.
2. Benchmark yourself against the market : In general terms, the greater the level of demand for somebody with your skills, the higher salary you can command. Place your salary demand in the context of the wider market by demonstrating the high demand and/or low supply of professionals with your skillsets and the impact this is having in the market and on wider recruitment practices.
3. Prepare your deal: Reference a third party source that benchmarks salaries for your industry, such as the Robert Half Salary Guide, to build an understanding of what the going market rate for your role and experience level is. It is always advisable to ask for slightly more than you are after when negotiating on salary, as usually your employer will make a lower offer. However, asking for more than anyone in your role could ever hope to achieve is unlikely to create the right impression with your employer.