It’s Time to Raise Salaries!
Unemployment is low, making the demand for top talent high. In this type of competitive market, your ability to hold onto your employees can depend very much on how competitively they are being paid. Is it time to raise salaries?
Higher salaries tend to incentivize higher output. Employees who feel they are being paid well for their efforts usually expend more effort.
Consider These Factors
There are numerous factors to consider as you assess the timing and scope of salary increases. Here are some to review:
- Benefits and Perks
- Assess the value of benefits alongside salaries.
- Does your organization offer performance bonuses and perks that increase employee engagement?
- Review your organization’s philosophy of compensation. Are there internal and external influences that suggest a need to update? How do you reward high performers?
- Are job descriptions and performance evaluations up-to-date?
- What salary review and planning tasks can be assigned to human resource and department managers?
- Employee turnover
- What is your company’s turnover rate for your sector and area? How does this compare with competitor turnover?
- Review the obvious and hidden expenses of hiring new employees.
Take an Objective Approach: Conduct a Market Data Analysis
There are advantages to being objective. Have the numbers front and center as you proceed.
- Company data will show areas of strength and weakness in your employee compensation package.
- Use online search tools to gather information about compensation packages for similar businesses in your general region.
- Read online trade articles and blogs about current salary trends.
- Inform yourself about inflation rates and cost of living data for your region.
- Having the hard data on hand to share with managers and staff answers questions and reduces misunderstanding.
Keep the Planning Positive as You Prepare to Increase Salaries
The information you gather will determine your planning timeline. Plan for success by:
- Keeping discussions positive.
- Engage your managers regularly and have them do the same with employees.
- Welcome all questions.
- Listen
- Rollout can begin when processes, from up-to-date job descriptions to financial projections, are in place.
Ultimately, good employees need to be paid well. Amidst times of low unemployment, a competitive salary is critical for ensuring that employees are satisfied and keeping your business running well. Now is the time to make sure that each employee’s compensation package meets or exceeds the competition.
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