With an ongoing pandemic and swelling numbers of white-collar employees resigning for greener pastures, the conversation continues among our peer group members: What will it take to retain talent and pay them fairly?

In reviewing a recent article in the Wall Street Journal, I noted that inflation is at its highest rate in nearly 40 years at 7%, and compensation for US workers has grown at a rate we haven’t seen since the turn of the 21st century. Industries that saw exponential increases include hospitality, law, and finance. While hiring stalled and layoffs were abundant during the early months of the pandemic, there’s no longer a shortage of work, and skeleton crews are being worked harder than ever – with organizations fairly compensating them for the increased workloads. 

High salary numbers are flashing like neon signs, and white-collar workers have plenty of options and are more willing than ever to negotiate. Economists worry that this could initiate a wage-price spiral: The cost of raising wages leads to higher prices for consumers, leading in turn to employees asking for a wage hike to match the cost of living inflation. 

Another wage-related challenge that our peer group of St. Louis area business owners are seeing is the “poaching” of C-suite execs, particularly among controllers and CFOs; recruiters are being offered financial incentives to be aggressive about filling empty spots. The candidates aren’t even actively looking for new opportunities, but the recruiters are finding them and making them “offers they can’t refuse”.

With so many balls in the air, it’s not easy for executives and owners to know how much of a wage increase is appropriate. Many hesitate to pull the trigger in a wage hike because there’s no way to walk back salary exceptions once they’re bumped up. Ultimately, it’s easier and less expensive to retain talent already in place instead of looking for new employees. If you’re not giving them what they need to stay happy and engaged, your employees will go elsewhere – likely straight to the competition.