There are times when paying competitive wages is not enough. The General Manager of a public power utility called me recently. He was having difficulty in both recruiting and retaining electrical engineers and experienced line workers. The feedback he was receiving was that his pay program was out of line with other electrical utilities. I was ultimately engaged to conduct a market analysis of their wages. The results were startling to him and his board—their wages were competitive with other public utilities within their market. How could this be? They found this incredulous.
A new reality has entered the marketplace. In some situations, paying the market rate is insufficient. The unemployment rate is plummeting. It is 2.7% in New Hampshire, 3.6% in Maine, 4.5% in Massachusetts and 4.7% nationally. At the same time, we have an aging population with experienced boomers permanently exiting the workplace. This is evident in public utilities and other industries as well. And finally, fewer young people are replacing these retirees. The convergence of these three occurrences means employers must rethink their strategy when it comes to recruitment and retention—and for some that means raising wages for critical positions.
So what should you do? To begin, look at your wages. Are you paying at the market rate? As part of this, understand what your true market is. In the study I conducted, we found that my client was now competing for key labor with organizations outside of public power. That meant we had to know what private sector and investor owned power companies were paying. Their marketplace for pay suddenly grew.
Second, look at your recruitment and retention. Are you able to recruit and retain key staff? Where do you recruit and what is your success rate? What positions are you losing? And remember, if you are being successful today, will it continue tomorrow?
Once you understand all this, then you can determine whether you must consider paying certain critical positions above the market. This is not an easy decision and it carries implications that will reverberate throughout the rest of your workforce. But it may be necessary.
We’ve entered uncharted waters. New strategies are needed. The time to act is now.
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