By Sarah Childs & Renee Henville
There’s no doubt that the most fundamental part of working is how you’ll be compensated for your time and effort. More commonly now, in an almost post-pandemic world, the salary you offer your workers, whether new or existing is not the only thing they are looking for.
To attract top talent and retain your employees in today’s market, a generous package is essential in order to ensure employee satisfaction. When employees feel valued, their motivation to come to work increases and their output increases, which in turn increases your bottom line.
How to decide upon a salary
When deciding on a salary to offer an employee or when considering a salary increase, the below is generally taken into consideration:
Overall business performance
Regardless of market value, the single most influential factor is going to be your business performance. When an employee requests a raise or new team member asks for a specific salary, business performance will be a significant factor in determining what that raise is or if one can be provided.
Performance-based pay raises are a tried and true method of determining fair salary increases. Not only does it allow for quantifiable justification of a salary increase but also provides motivation for employees to perform. Goals or benchmarks should be reasonable and attainable.
Responsibilities and expectations
Evaluate employees not only on performance but also on the amount of responsibilities they have either been given or have taken on themselves and what kind of expectations you have for them. These factors are both very telling of an employee’s work ethic, ability to be a team player and their future success.
Relevant market indicators (such as the above)
The market value factor can either be a positive selling point or a point of avoidance depending on where your company falls on the spectrum of market value vs. actual salary. If employees are not compensated in line with the industry, region, position and experience standard there is greater risk of that employee resigning or turning down the role for a better base salary offer. If you are compensating your employees fairly, then that may be a reason to deny a salary increase request.
The future (staff retention)
Regardless of what your employee’s position or performance level is at this very moment, they have a future you should consider. Many times, an increase is essentially an investment in the employee and therefore the company’s future success. Some future considerations that play into determining what kind of raise they should receive include what their responsibilities will be like in the next year or so, the anticipated workload they’ll be taking on, whether or not they’ll be promoted and whether or not you’d like them to stay with the company for a significant amount of time.
In exploring all of the above within your company, you will soon see that placing a numerical value on your employees is more often than not their most driving factor, but that may not suit your business. If you find that you can’t keep up with the market value, it is also worth considering what other factors may influence someone to stay or begin their employment. Benefits you can offer your employees such as flexibility around hours or work location, onsite parking, birthdays off, outside work social events and even down to the little things like the office chocolate box or decent coffee options are all worth considering to make your workplace more attractive.
If you would like to discuss recruitment, wage reviews or even workplace incentive options that might suit your business, please reach out to our team on 07 5613 1846 to see how we can support you.