How much should you pay your staff?
Do you pay your staff enough? I’ve worked with employers who pay the least they can get away with. But is that the right thing to do? Is paying the least you can going to save you money in the long run? How much should you pay your staff?
Pay and productivity
It sounds paradoxical doesn’t it, pay less, cost more and yet that’s exactly what can happen. The attached article (available here) found that 16% of employees have a second job just to pay the bills. What impact does that have on the primary employer? Do they get the best out of their employees? It is very unlikely that a tired employee or one who is suffering from financial stress is giving you their best. This type of cost is often hidden but is damaging UK Plc. As this Financial Times article shows, the UK is one of the least productive members of the G7. If employees are routinely working long hours but producing little, no one benefits. Do you pay your staff enough? If they are working two jobs, maybe not.
Pay and retention
A second issue regarding pay is how do you use it to retain high performing team members? As you can see on our previous blog, the average UK pay rise is 3%. If you hire on a low salary, how do you close the gap? Many companies use their annual salary increase budget to pay for promotional increases as well. If possible, do not do this. Why? Well if you pillage the entire budget for your high performers, you pay next to nothing for your core performers. Who are the core performers? They are the bedrock of your organisation. They keep the wheels turning. Alienate them at your peril. Do you pay your staff enough? Well if you recruit low and are always trying to play catch up, probably not.
How do you know if I pay your staff enough?
Well there are several ways you can assess whether you are paying enough. Do you get the experience that you are looking for in a candidate when you are recruiting? Are you current employees asking for a pay rise? You can check Job boards such as Glassdoor, Indeed or Totaljobs to give you an indication of average salaries in the area. However, this will only match a job title, not the size of a role or the responsibilities that the role holder will be expected to fulfil. Do they match yours role exactly? You are unlikely to know based on a job advert alone.
The most accurate method is to access some of the global salary surveys such as Hay, Willis Towers Watson or Mercer. We can help you with this and can evaluate your entire organisation using the latest survey data. So if you don’t know if you pay your staff enough, contact us below!
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