Hiring Increases Spur Recruiting Difficulties, New-Hire Salaries

By Theresa Minton-Eversole Jul 2, 2014

Increases in manufacturing and service-sector hiring are projected to reach four-year highs for the month of July, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey, released July 2, 2014. And as is usually the case with stepped-up hiring levels, employers also reported having a more difficult time recruiting for key positions, as well as difficulty with maintaining flat new-hire compensation rates.

“The positive hiring trends HR professionals have been reporting in recent months look like they are set to continue in July,” said Jennifer Schramm, SPHR, manager of SHRM workplace trends and forecasting. “And with hiring rates trending up, it makes sense that recruiting difficulty continues. We are also finally seeing a slight improvement in the new-hire compensation index.”

The LINE Employment Report examines employers’ hiring expectations and job vacancies, difficulty in recruiting top-level talent, and new-hire compensation based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.

Employment Expectations



In July, the hiring rate will rise in manufacturing and services compared with July 2013.



Recruiting Difficulty

In June, recruiting difficulty increased in both sectors compared with June 2013.



New-Hire Compensation

In June, the rate of increase for new-hire compensation rose in both sectors compared with a year ago.



Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line

Employment Expectations

Roughly half of manufacturers (53.2 percent)and service-sector companies (49.2 percent)will add jobs in July, while layoffs also will decline in both sectors compared with a year ago. The manufacturing sector’s hiring index will rise by 14.8 points compared with July 2013, while the service-sector index will rise by 6.7 points compared with a year ago.

The LINE employment expectations index provides an early indication of the U.S. Bureau of Labor Statistics (BLS) Employment Situation report findings. BLS numbers covering the same time period are released approximately one month after the LINE report.

A net total of 22.1 percent of manufacturers reported increases in exempt vacancies in June (30.9 percent reported more vacancies, 8.8 percent reported fewer), up 1 point from June 2013. A net total of 23.9 percent of service-sector respondents reported increases in exempt vacancies in June (32.5 percent reported more vacancies, 8.6 percent reported fewer), up 2.8 points from June 2013.

Responding firms also reported that they experienced increases in hourly job openings in June. A net total of 28.1 percent of manufacturers reported an increase in nonexempt vacancies -- a rise of 3.2 points compared with June 2013 and a four-year high for the month in the sector. For nonexempt service positions, a net total of 37 percent of respondents reported increased vacancies in June, marking an increase of 16.3 points from June 2013, which is also a four-year high for the month in the sector.

Recruiting Difficulty

The LINE recruiting difficulty index rose in June in both sectors compared with a year ago, indicating that the competition for the most qualified candidates for key jobs may be heating up, noted Schramm. HR professionals’ challenges with landing key candidates reached four-year highs for June for both sectors.

A net of 25.9 percent of manufacturing respondents reported having more difficulty with recruiting in June, an increase of 12.1 points from June 2013. A net of 19.3 percent of service-sector HR professionals had more difficulty recruiting in June, a jump of 6.3 points from a year ago. June marks the second consecutive month that recruiting difficulty has reached a four-year high for the month in both sectors.

New-Hire Compensation

More employers have raised pay for new hires, too, compared with a year ago, said Schramm.

In the manufacturing sector, a net total of 10.9 percent of respondents reported increasing new-hire compensation in June, an increase of 3.2 points from June 2013. In the service sector, a net total of 12.5 percent of companies increased new-hire compensation in June—up 7 points from a year ago.

“SHRM’s latest Employee Job Satisfaction and Engagement survey report shows that compensation is now employees’ number one job satisfaction factor, and employers may be starting to experience pressure to bring wages up in response to a more competitive recruiting environment,” explained Schramm.

Overall, however, the index’s data show that most organizations are not increasing new-hire compensation. This is consistent with recent BLS findings on real average hourly earnings, which fell 0.1 percent in May 2014 compared with May 2013.

Theresa Minton-Eversole is an online editor/manager for SHRM.

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