While employees accept and stay on the job for a variety of reasons, the fact is that money talks. While it’s obvious that adequate compensation is essential to hiring and keeping the best staff, less obvious is the formula to coming up with an actual number. If you’re one of the many human resources managers wondering whether you’re paying your employees enough, these considerations can help you gain a more comprehensive understanding of where you stand and where you need to be to attract and retain the best team.
Know the Market
Modern technology — and the internet, specifically — puts a wealth of information literally at your fingertips. Use it! A number of different websites let you search salaries paid by other companies in your line of business. Additionally, the Bureau of Labor Statistics offers current information about salaries across a comprehensive range of industries.
Begin with these figures, then adjust to account for factors such as longevity, experience and performance.
With so many companies competing for the best talent, it’s essential to know the market. A job board can be your best friend when it comes to understanding the community, identifying top talent and promoting your business and brand to potential employees.
Know Your Staff
While employees may start out with a core range of duties, these often change and evolve over time. If your staff has grown in terms of skills and responsibilities, but their salaries haven’t changed to reflect this growth, you’re at risk of losing employees. Why? Because you’ve given them valuable on-the-job experience without equivalent compensation. This not only makes them more attractive to other companies, but also detrimentally affects morale: while workers may initially value the opportunity to take on more, eventually they’ll feel overworked, unappreciated and ready to consider other options.
One of the biggest signs that you’re paying your employees too little may be staring you in the face: high turnover. While turnover is a natural part of the business world, excessive turnover — anything over 15 percent annually, by some accounts — is expensive, unhealthy and cause for alarm.
The most successful businesses maintain minimal turnover rates; if your employees are jumping ship, then it’s time to assess what may be going wrong. In many cases, the answer is simple: you’re not paying them enough.
Jonathan Swift said, “A wise person should have money in their head, but not in their heart.” This sentiment is backed up by a recent article in Forbes, which determined that the most desirable employees are looking for more than a six figure paycheck. While benefits, title, flexible work schedules and other perks all come into play, ultimately one factor rises to the top when it comes to the most sought after workers: intrinsically meaningful work with potential for growth and advancement.
Want employees who stand out from the crowd? Create a workplace that does the same.
At the end of the day, a human resource manager’s task is to identify and acquire talent. So while asking yourself if you’re paying your team enough is a worthwhile question, it takes on even greater relevance if followed up with the question of whether you’re fostering a workplace that offers true satisfaction. Because when it comes to competing for the best and the brightest, willingness to invest in extraordinary employees with a fair salary –along with cultivating a nurturing environment which fosters fulfillment — can pay off significantly not only when it comes to signing top employees, but also when it comes to keeping them.