Salary growth hits 12-year low

Six in 10 employees leaving an organisation are moving sideways into a similar role and more than four out of 10 employees say the reason they leave an organisation is about money, according to this year’s AIM National Salary Survey. 

In the 2015 survey, the average salary movement is +3.4%, which is lower than the +3.6% recorded in 2014 and the lowest since 2003. There was an increase in some sectors, such as IT and business and professional services. Employers do not expect the situation to improve, forecasting the average salary to drop a further 0.2 percentage points (pp) next year to +3.2%. 

Wavering business confidence and a tighter labour market means organisations have their hands tied when it comes to pay rises and therefore need to be more creative to retain employees, said AIM Group Acting CEO Tony Gleeson.  

“Lower pay movements across the board should not be the reason why organisations are losing their employees,” Gleeson said.

“Employers need to be creative when looking for ways to keep their people. When you consider how expensive losing employees can be, along with the loss of corporate knowledge and disruption to clients and employees, this should be a real focus for organisations in the year ahead,” he said. 

While there has been an increase in the number of organisations offering flexible work arrangements, this year’s survey highlights that fewer organisations offered variable rewards schemes to employees across all job levels.

“Bonus schemes, profit sharing, performance- or project-based pay are types of variable schemes that are low-risk options with a huge upside for employees and productivity overall,” Gleeson said.

The survey finds the top two reasons why employees leave to take on another job are for a new challenge (80.4%) and limited career advancement opportunities (55.3%), followed by insufficient financial reward (44.7%) and conflict with their manager or other employees (26.6%).

“The financial component of work is only part of overall job satisfaction. Employees need to feel connected to an organisation and have the opportunity to grow and develop,” Gleeson said.

The survey highlights that of the top five human resources challenges posing the greatest risk to organisations, the need to develop effective leaders comes out at number one. “The good news is more than half of respondents said if companies get leadership development right, then this could supercharge the business,” Gleeson said.

The National Salary Survey is based on the responses of more than 557 organisations across Australia, covering more than 25,000 employees and 282 job roles