Salary increases: Why it’s not just about the money

I’m almost certain that every business leader has considered increasing the salaries of their employees over the last 6 months.?

Whether it’s due to pay freezes or decreases during the pandemic, it’s time for a company-wide salary review, or they’re addressing the rise in the cost of living, business leaders everywhere are frantically searching for answers on what to pay their workforce.?

If you don’t fall into any of these categories, perhaps you’re thinking about offering a salary increase to encourage loyalty in an extremely competitive market. Whatever the reason is, it’s essential to align your workers’ salaries with the industry average to keep them both motivated and happy.?

Better pay, better company success

Be under no illusion. Your talent *is* being headhunted, and eventually, they’ll listen to what’s on offer.?

Now, don’t be alarmed. This doesn’t automatically mean they’ll leave, but they will know *exactly* what they’re worth. (I always stress the importance of knowing your own market rate, so why shouldn’t your employees know theirs?)

If your workers find out their salaries are well below the market average, it’s only natural to expect unrest, disengagement, and in the worst-case scenario, leavers. We know that money isn’t the only factor that keeps people working hard, and it’s certainly not the key component to make someone jump ship, but it is definitely a driving force that shouldn’t be undermined, overlooked, or ignored.

For an employee, salary determines how they can live their life, their home, their transport, and how they can take care of themselves and their families. For an employer, there are so many other factors that need to be considered when it comes to your people strategy. Most of the time, the most important of these factors is how you pay and reward your workforce.?

Business principles must be considered, like costs on salaries versus income and affordability. You need to think about your competitiveness in the market and where your money is best spent. For example, is it on higher wages or process efficiencies?

In a talent-short market, salary levels can have a direct impact on employee engagement. With better employee engagement comes increased productivity, higher employee satisfaction and compliance, and in turn, will result in reduced absenteeism and improved attrition overall.?

With all these benefits there is an undeniable link: better pay leads to better company success. So, whilst increasing salaries may seem difficult in the short term, the long-term benefits are definitely worth the investment.?

Still not convinced? – consider these points as well:?

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It’s the right thing to do?

If your workers are doing a great job, they deserve to be rewarded for it. It’s just the right thing to do! This approach shows that you care. Sharing your company’s success, helps your workforce feel like the valuable asset that they are.

Keeping your Talent??

Finding great talent is hard, but keeping great talent is harder! You’ve worked tirelessly to recruit, train and develop your talent to get them to top performers. Do you really want them to leave??

If they’ve worked for you for a while, made strong relationships, and understand what you are trying to achieve as a business and how they fit within that - they’re extremely valuable. If you compensate your employees well, they’re far more likely to stay with you.

Plus, recruitment costs are just downright expensive. Reducing attrition is the best way to avoid significant, unnecessary costs. At the end of the day, It’s about the bigger picture. A ￡1,000 a year salary increase could save on recruitment and onboarding costs that often reach tens of thousands.

Increased Productivity??

A higher salary tends to lead to a culture of high performance and productivity. It’s proven that people work harder to prove they deserve to be earning more than employees at competitor companies.

Just consider: people are more focused because they’re not worrying about external factors and living paycheck to paycheck – even more so in the current climate. Removing money concerns takes away real-life problems that could be occupying your workers’ headspace.

Talent Attraction??

You’re probably experiencing a huge talent shortage, like most other companies in our industry. We are certainly busier than ever before.

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We ask our clients all of the time: “How are you going to stand out from your competitors to attract the best talent?”

There are several benefits you can offer to attract top talent, like remote or hybrid working. But one sure-fire way is to offer an attractive and competitive salary.

Once new employees take advantage of the salary you’ve proposed and all of the other company benefits you have to offer, your recruits will aid in attracting even more top talent – word of mouth is a powerful thing.

That’s why a salary increase is not just about the money, you also get a great deal in return.?

For more information about salaries and understanding what to pay your staff, contact identifi Global today.?