The latest REC/KPMG Report on Jobs found that starting salaries are increasing at a rate not seen since July 1998. This seems like great news for jobseekers and the economy as more jobs equals more confidence and therefore more growth. Not necessarily!
Many businesses are currently suffering from recession hangover, where under-investment in staff has led to a skills deficit. The war for talent is most definitely back. However, the solution is not as simple as rehiring talent and splashing the cash to lure highly-skilled staff from competitors. This continued growth in starting salaries is unrealistic and unsustainable in the long term and the fact remains that some job vacancies are not being filled because staff want their reward to be about more than an increase in pay.
What employers need to recognise is that the view of those looking for new jobs is changing. They want to exercise a greater degree of choice in who they work for and have more control over their work-life balance. The idea of the 'portfolio career' will become a reality as employees move around organisations with great frequency, always looking to enhance the core skills that make them employable.
Retaining these employees will become harder. People management tools such as performance management, reward, recognition, organisational culture, leadership role modelling and information flows need to be used in a far more sophisticated way, in order to create a talented workforce.
If done properly these tools can create organisations that recognise not all employees are the same. If workers are expected to have a greater commitment to the ambitions of the business, are able to innovate, think independently and respond to company strategy, they need to be managed and motivated differently.
With highly-skilled, creative staff difficult to find and at a premium, the war for talent is most definitely on. Becoming the highest bidder is no longer a guarantee of securing the best person. Connectivity, ethics, community impact and a sense of purpose are all factors which will mean tomorrow’s employee can be proud of who they work for. It may be a challenge, but those organisations that rise to it and effectively spend time defining their employer brand will gain competitive advantage. It is a challenge that needs to be faced sooner rather than later.
Ingrid Waterfield is a director of KPMG's people and change practice