Are Your Employees Underpaid?
Salary is a hot topic within companies. With more career advisers recommending employees jump ship every few years in order to raise their earnings, companies can be caught behind the curve by spending time training people who don’t plan to stay. That said, business don’t operate on kindness and “giving” raises can be a tough sell to senior leadership and company boards. What can you do to stay competitive and keep your best people?
1. Stay Attuned To The Job Market
Even in the over-6-figure category, many workers feel underpaid. If you operate by looking purely at the job marketplace, they may be right. The national unemployment rate is hovering around an 18 year low, which means the demand for workers is higher or close to the supply. In addition, the skills gap and demand for experienced and skilled workers continues to climb as the US continues to grow as a service-based economy and the tech sector is thriving. Remember that an employee’s salary can climb as high as a company is willing to pay them, so if your competitors keep stealing your best talent, it might be time to voluntarily offer more money to turn the tide.
In addition, national companies may need to adapt their strategy in high cost of living areas. A $60K annual salary in Memphis feels much different to the same salary in San Francisco. If you have headquarters in high cost areas, be prepared to pay workers comparably or to relocate your business.
2. Don’t Expect Loyalty, But Make A Plan To Reward it
Are you tracking employee anniversaries? Does the CEO, President or Chairman (or at least the department head) reach out to employees as they pass their yearly milestone? More importantly, does every employee get an annual performance evaluation supported by key metrics? Do they get a chance to vent their complaints or share their ideas to improve the business or daily working conditions? These are all key areas for employees and many companies don’t show respect for employees in this way. Gone are the days where a 2 or 3% annual raise over 15 years is enough to keep up with the cost of living, and, crucially, responsibility creep that comes with giving time to the same company.
Ironically, many companies treat veteran employees worse than brand new ones, despite the fact that many of them are performing multiple roles and no longer need training. While both new hires and veterans have important roles to play, create a plan to reward the key players at your company that contribute to the culture and achieve above their “pay grade.”
3. If You Can’t Do Pay Raises, Consider A Performance Bonus
Of course, giving hard pay raises may not be in the budget for the company, even after shaving down unnecessary costs. Look for areas of your business where you can cost share for increased productivity. For instance, if the team in charge of planning a large event can find ways to cut pre-planned costs, consider cost sharing the difference with them as a reward. Reduced turn times for certain business functions might also merit a per-unit bonus at the end of the month. Be sure to set these up based on clear metrics. You may even be able to source ideas from employees.
4. Pay Attention To The Word “Feel”
A recent survey, which is being cited by multiple publications, asked workers if they thought they were paid fairly, underpaid or overpaid in their current job. In some iterations, the workers stated they felt underpaid. Companies with a solid employee listening program may be able to prevent some of these issues before they begin. If managers aren’t aware of responsibility creep, of course employees will feel undervalued. If HR and Recruiting are not maintaining a decent pipeline to backfill key positions as needed, employees can be forced to perform multiple roles with no increase in compensation, sometimes indefinitely. If workers feel benefits are inadequate, they may be suffering from financial strain caused by health problems or lack of child care. Further, other daily stressors can create a negative work environment, even if the employee’s job performance doesn’t suffer on the surface. For instance, a workplace stops providing coffee to cut costs but now workers need to wake up earlier to make or buy coffee.
Employee listening isn’t easy, and many employers fear receiving negative feedback. That said, in the examples above offering childcare credits or free unlimited coffee may be cheaper than hiring and training new workers. Offer a way for employees to make suggestions anonymously and respond to their suggestions openly, even if the answer is no. Sometimes being heard can make employees feel just as valued as a bonus.
In order to enact any of these solutions, you need reliable analytics. If you already have an exiting BI tool, ask how you can use it to research current salaries, top performers and employee sentiment. If you need help, contact us today for a demo of multi-function, industry-agnostic BI and financial planning tools that can help you with any of these suggestions. We’ve set up monitoring systems for performance bonuses, exit interviews, employee feedback, recruiting analysis and more for our clients.