HR pros underestimate jobhunting, underpayment, dissatisfaction

Manufacturing News, Source : The Manufacturer US
Published : 01 Mar 2007 13:57

Waltham, MA, February 22nd, 2007 -- Salary.com, Inc., a leading provider of on-demand compensation management solutions, today released results from its 2006/2007 Employee Satisfaction and Retention Survey completed by 11,852 employees and 311 human resources (HR) professionals. This annual survey provides insights into the state of the union between what employees value and what HR professionals perceive to be the most important factors in employee job satisfaction.
Employers dramatically underestimate both the volume and seriousness of employee job searches -- despite HR professionals identifying retention as their top business challenge.

Over 60% of employees surveyed said they plan to look for a new job in the next three months; nearly double the 36% that employers believe are looking. More importantly, employers are at risk of losing their most productive talent -- people who have been in their position for 3-10 years. Nearly 66% of tenured employees plan to find new jobs over next 3 months. If realized, excessive turnover in this group could have both hard and soft costs implications for employers. HR professionals estimate that the hard costs to replace an employee ranges between 33% and 50% of their base salary, in addition to and soft costs such as the loss of productivity and institutional knowledge, as well as new hire recruiting and training expenses.

"It's no surprise that inadequate compensation leads the list of factors that make employees want to leave a current position," said Bill Coleman, senior vice president of compensation. "According to the survey, nearly 50% of employees believe they are underpaid. After analyzing the data, we found that less than 22% were paid below the fair market value for their job."

A contributing factor to employees feeling underpaid could be over-titling. "We found that 30% of respondents were likely over-titled, leading many to feel underpaid when in reality an inflated job title was the real issue," said Coleman. Additionally, the survey showed that 15% of respondents were actually overpaid and 33% were paid reasonably close to their fair market value. The “grass is greener” syndrome illustrates that many employees lack insight into fair pay for their job, which could fuel job search activity.

"While pay is important, it isn’t everything," said Coleman. "The real surprise is that employers are largely unaware of the real reasons for employee dissatisfaction beyond pay. This disconnect could lead organizations to focus on the wrong issues and as a result, experience high employee turnover and replacement costs."

Employees rate good relationships with coworkers, managers and good working hours as the top factors that keep them in their current jobs. This contrasts with responses from HR professionals who rated benefits, job commitment and culture as the leading contributors to employee retention. This perception gap can put employers at risk of losing key talent, simply because they are focusing retention efforts in the wrong places.

Other key findings from the survey include:

*Lower-paid employees are more likely to look for a new job than higher-paid employees; 46% of those respondents earning less than $40,000 a year stated they are very likely to leave.

*Seventy percent of hourly, non-union employees are likely to look for a new job, making them the most likely segment to leave their current jobs. This compares to 50% of executives who are the least likely to be job hunting.

Human Resource professionals greatly underestimate the steps employees have taken in their job search:

*Seventy-three percent of employees state that they have updated their resumes, compared to only 32% as estimated by HR professionals.

*Nearly 80 % of employees have surfed online job postings while HR estimates that only 40% are doing so.

The survey uncovered a possible retention strategy to help employers address those employees that are paid below the market value for their job – the counter offer:

*The use of counter-offers or pro-active pays raises could help correct pay inequity. Survey results show many of the underpaid employees could be convinced to stay with a small pay adjustment.

*The majority of employees said that a 10-15% pay increase would be sufficient to overcome their perceived or real pay shortage - an amount far less than what HR reported it would cost to replace a key employee.

However, many HR professionals who use counter-offers come up short, averaging only 8% which falls below the employee hurdle to stay. The cost to pay a bit more in a counter offer could be offset by the cost to replace the employee at risk. It can be effective tool to bear this 10% in mind when dealing with an employee with an outside job offer.

About the 2006/2007 Employee Satisfaction and Retention Survey

Salary.com invited a cross-section of individual employees and business representatives from across America to participate in its 2006/2007 Employee Satisfaction and Retention Survey. Prospective participants received an email containing the survey questionnaire. Participants completed as many sections of the survey as they desired, and then submitted their results to Salary.com electronically. We also conducted a number of phone interviews to validate certain survey results.

Salary.com compensation professionals reviewed the data for consistency and accuracy, and excluded data that appeared to be invalid. A total of 11,852 individuals and 311 human resource or other company representatives responded to our survey. Among the individual employee respondents, 10,972 were employed and provided valid responses to the survey questions - the remaining 879 were excluded from all analysis.

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