I am a business owner and last week I had yet another employee asking for more money. “But John gets this, and I don’t.” It feels like someone is always asking me for more money and they always seem to cherry pick what suits them best.
Does this sound familiar? Are you unsure how to handle this conversation and feel extreme pressure to give in? Do you want to keep your best employees while managing their expectations in the right way?
This scenario is all too common in today’s workplace, where pay and compensation are frequent sources of employee dissatisfaction.
It is estimated 63% of employees leave their jobs due to pay and compensation concerns, according to one study conducted by Pew Research Centre in 2021. This turnover can have a significant financial impact, with the cost of hiring and training a replacement estimated to be about a quarter of their annual cost to the company.
So how do you strike the right balance?
We recommend the following:
1) Benchmark your salaries for your key staff
By implementing a salary benchmarking process, you can make sure you know what is fair and reasonable for staff in the market. That way when staff approach you, you can point them to the study to show their pay is fair.
2) Understand your remuneration structure
The benchmarking will look at a total package cost. Make sure you can identify all the benefits you offer employees to make a proper like for like comparison. Where you have legacy employees (long service) or have purchased another company, contracts and employment packages may differ giving employees opportunities to cherry pick the areas of most benefit to them. However, if you know the overall total package value this is easy to resolve.
3) Set clear goals for employees to progress
Be prepared to have a frank conversation with key staff on what they need to do to get higher pay e.g. take on more responsibility, hit key financial measures, manage a team etc… Use SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals and try link this to company performance.
4) Have the difficult conversation
Use the opportunity to showcase what the employee is doing well, but also where they are not performing where they should. Have a balanced conversation with the employee.
5) Stick to what you say
This builds credibility.
For more detail and help with benchmarking, feel free to reach out to us today at [email protected].