2016 might become known as the ‘Year of Employment.’ If you’re an employer, you can expect to award bigger raises, hire more people, and adapt to a more flexible work environment this year. Developing technologies, startup trends, and economic considerations are all part of the reason the job market is heating up (and costs are proportionately rising).
But what is really driving the changes in hiring, salaries, and employment this year? We’ll outline the culprits to the rising costs below.
You may be giving bigger raises.
Raises in the last few years haven’t been remarkably high or low. This year is different. On average, employees this year will receive their biggest raise in 3 years. According to Korn Ferry Hay Group’s 2016 Salary Forecast, real wages (average increases that are adjusted for inflation) will rise 2.5%. Other studies showed figures from 3.4%-4.5%.
In any case, raises will be expected this year, and you’ll be in the financial position to do it as long as you plan for the raises and make adjustments as needed. If you can’t afford raises like these, consider hiring office help part-time or on a contract basis.
Health care might be more expensive.
This might be something your business has already been dealing with, and the trend isn’t changing this year. Health care costs are projected to increase by around 4.5% in 2016, even after accounting for benefits changes in efforts to combat the increases.
Most employers will find themselves passing on at least some of this cost to employees, and that’s understandable. Don’t pass on too much though–there will be aggressive competition for talent this year, so holding on to the employees you’ve got is especially important. You don’t want to lose your best employee over a small adjustment for your cost increases.
Wellness initiatives cost more upfront.
Because of rising healthcare costs, many businesses are now asking their employees to participate in wellness programs and initiatives. These programs are designed to help staff maintain general health and ensure employees can achieve their best possible health level while working for the company, cutting down sick days, hospital visits, doctor’s office visits, and therefore saving healthcare costs in the long run.
While this isn’t a necessary cost increase, it will be a smart one to make voluntarily. It costs a bit more to implement these initiatives up front, but over time, they will save your company money.
There’s more competition for top talent.
More employers will be hiring new talent this year, and they’re well aware of the higher salary expectations. Aggressive talent recruiting equals more competition for top talent, and top talent doesn’t come cheaply to begin with. If you can’t compete with what other employers are offering, you could find yourself losing your best employees or unable to attract the right level of talent for new positions.
A higher influx of millennials into the job market means there are a lot of “green” candidates in the job market today, but a high proportion of advanced degrees and specialized, often technological skill sets make this generation valuable to the workplace.
You’ll navigate flexible workplace changes.
Each year, employers allow employees to spend a little more time telecommuting, working remotely or virtually, or off-site. Research repeatedly shows that these ‘flexible’ work options are better for employees, result in higher productivity and higher levels of job satisfaction, and end up saving the company money. The more your employees work from home, the more money you save.
This is the year you’ll need to figure out an official plan for flexible work options and how you’ll navigate those in your company.
Rising costs due to bigger raises, higher healthcare costs, wellness initiatives, aggressive talent recruiting, and transitioning to a more flexible workplace will all affect businesses across the nation this year, including yours. What else are you expecting to change in employment this year? How are you planning on responding to the changes you’ll see in your business? We’d love to hear from you in the comments section.
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