Salary rises to keep top talent

Bosses are sweetening the deal for their best performers. Photo / NZ Herald

Improving economic conditions and skill shortages are expected to bring salary increases of about 2-4 per cent next year.

The Michael Page Salary & Employment Forecast shows 69 per cent of employers surveyed believed salaries will rise above the inflation rate over the next year.

More than 2500 hiring managers from New Zealand's corporate sector were surveyed - and almost half believed that the professional skills shortages would continue, with the demand for skills already exceeding supply across sectors such as sales, marketing and supply chain.

The national director of Michael Page in New Zealand, Pete Macauley, says times have changed since the worst of the global recession. "The options for career growth were limited during the economic downturn period, with many professionals merely happy to keep their jobs," Page said.

There is still some inertia, with white-collar employees apprehensive about making a job change.

"We are now starting to see more companies in the position to reinvest in their talent with career-progression opportunities. This investment, coupled with nervousness around global conditions and the perception that the job market is flat, means that many top performers are not proactively looking for new roles," he said.

The report indicates that employers are hiring more strategically. Businesses are concerned about their longer-term growth and are focusing on bringing in skills which will support their future direction.

With skill shortages critical, employers are focusing on retention policies. Given the limited flow of talent into the market, businesses are using financial incentives and career-development opportunities to keep their best staff.

"Companies are demonstrating a targeted approach to retaining and developing their best people. To be successful, employers need to complement financial rewards with opportunities for career growth," Macauley said.

To retain staff, most employers are offering salary increases or bonuses but it's mostly limited to top performers. Only 3-6 per cent of employers are intending to give standard salary increases across the board. The trend towards "paying for performance" looks like a permanent move, with 68-75 per cent saying salary increases will vary on performance.

But the report also showed a huge pay gap even among white-collar workers, ranging from about $35,000 per year for an accounts clerk to about $350,000 per year for a high-level chief financial officer. In marketing, salaries range from $47,000 for a marketing assistant up to $210,000 for a marketing director of a large corporate.

Michael Page says market salaries now tend to be less uniform and circumstances relating to individual companies can reflect on their market rates.

The Michael Page Salary & Employment Forecast survey was distributed to 2500 hiring managers in three key areas of specialisation: finance/financial services, procurement and supply chain, sales and marketing.