Last Updated on Thursday, 10 November, 2022 at 9:13 am by Andre Camilleri
For 72% of HR managers, challenge is salary demands
Employers are facing four main challenges namely expectations for higher salaries, a demand for higher salaries from employees and job applicants who do not necessarily have the appropriate skills that meet their requirements, a difficulty in attracting talent and a difficulty in retaining staff. This may eventually lead to employers having to assess the sustainability of their salary structures.
This was the main outcome of this year’s HR Developments Annual Survey just published by Misco as part of its annual Salaries & Benefits Report for 2022. This ninth edition was undertaken once more in collaboration with the Malta Employers Association, a collaboration that allowed Misco to expand the survey further to be able to deliver enhanced and more comprehensive results.
One of the main findings of this year’s survey revealed that for 72% of respondents, their main HR challenge is salary demands, a figure that turned out significantly higher than the 56% mentioned last year.
The lack of experienced and qualified staff and the lack of job applications also received a significant number of mentions which were higher than last year, interestingly confirming the trends we have been observing that the pressure to retain staff appears to be a multifaceted issue of available talent, salary and also an issue of finding staff with the required skills and qualifications.
While the main challenge for most HR practitioners is going to be rising salary demands, retaining staff will be the most important strategic objective of the HR function.
“This report comes at a time of great economic uncertainty,” writes economist Lawrence Zammit, founder and managing director of Misco in his foreword to the report.
“On one hand, the inflation is rising to unprecedented levels, impacting the remuneration of employees across the board. On the other hand, staff shortages continue to lead to wage inflation. And all this is happening as businesses seek to realign their operations to the new post-pandemic realities,” he added.
The report, which as with past editions, is included with this year’s Misco’s Annual Salaries & Benefits Report, also shows how the attraction, engagement and retention of talented employees have become the key challenges of most employers.
“This year’s survey shows that while companies are adopting different strategies in the way they remunerate their employees and how they address staff shortages, several companies have restructured themselves to provide scope for career progression for their employees and to address gaps in their structure,” continues to explain Zammit.
“On the other hand, employees are increasingly seeing a greater number of job opportunities available – confirming competition which exists for talent which is leading to demands for higher remuneration,” he added.
Respondents were asked what they consider to be the key strategic objectives for the HR function in their organisation – 85% of respondents mentioned staff retention, up from last year’s 78%, followed by 75% mentioning the staff motivation and 73% staff development.
An interesting finding was that 72% of respondents stated that their key strategic objective is to provide support management to manage employees more effectively.
Asked what the main obstacles that the HR function is facing, 50% of respondents mentioned lack of resources – 46% are experiencing difficulty in setting up an effective performance management system. Additionally, 38% of respondents are feeling that management is not appreciating the value of HR.
Other obstacles mentioned were the lack of a HR budget and the lack of decision-making empowerment of the HR team mentioned by 32% and 29% respectively, no engagement of senior management in the HR agenda as a strategic element (25%) and lack of appropriate skills in the HR team (21%).
“Although HR processes seem to be in place in most organisations, confirming that the HR function’s presence is increasing, these results also show that the role of the HR function still needs to take on a more strategic role within most organisations and not be limited just to an operational role. It also needs to be more adequately resourced,” added Joanne Bondin, director at Misco who oversaw the compilation of the report.
“However, while salary demands remains by far the key challenge, the most important priority for the HR function for the coming 12 months is retaining employees,” concluded Bondin.