Revisit Your Pay Structure, Before It’s Too Late

When you search for the perfect candidate for an open position, you look for someone with all the right skills, enough experience, the right education, and someone who will grow into the job and become a valuable member of your team and organization.

In return, you know the right candidate is looking to do a job they love and that they look forward to starting another chapter in their career with your company. Someone eager to learn, quick to jump in, and ready to make a difference. You also know that any candidate is also hoping to be compensated fairly for their work.

While the U.S. and most of the western world struggled under the recession, salaries and hourly wages were mostly stagnant. Employees were easy to retain. No one wanted to enter the job market with so few companies hiring. Even after business picked up again and companies began hiring once more, the effects of the recession lingered until business leaders were certain the positive direction was more than a fluke.

It’s time to take a hard look at your compensation levels. What once was a “buyer’s market”, where the recession guaranteed that jobs were hard to find and lower compensation was a risk job candidates were willing to take in order to have a job, that time is passing. Now, with the markets on a long and happy upswing, jobs are far easier to find, and employers are offering higher salaries and hourly wages than they have in the last 5 years.

If your organization undervalues employees, and pay less than the going salary or hourly wage, you lose in three ways. One, your employee retention rate falls. As your people become aware that they are being underpaid compared to employees working elsewhere, they leave for greener pastures. Two, when you discover you’re losing a trained and valuable employee and make a counter-offer, your outgoing employee often feels insulted even when the offer is competitive: If they were worth that much yesterday, why were you paying them considerably less? Three, you cannot attract new employees with the skills and experience you need if you don’t offer a salary or wage competitive with the market rates for those jobs. Positive corporate culture and great benefits only go so far, people need to be paid what their work is worth in order to stay with your company.

It’s not as simple as deciding to pay more. Examine your HR manual and you may find that limits have been placed on how large a raise can be given at once, with annual maximums, or that salary adjustments to reach fair market salaries/wages aren’t on anyone’s radar or in the manual.

If you have an employee whose date-of-hire falls within 2009-11, those associates may have taken a pay cut to work for you, out of a desire for job security. Those same people are now taking a look on Monster, LinkedIn, and other sites, and discovering that the current job market allows them to earn up to 20% elsewhere. By job-hopping, they can raise their income up to 20%!

Experience, skilled, and hard-working automation, engineering, and sales professionals are expensive to hire, expensive to train, and hard to find. Why not increase BOTH your retention rate AND your rate of successful, lasting new-hire rates by offering competitive compensation?

Want to learn more about how Step Up Recruiting can help you increase your retention and successful new-hire rates? Contact us today!