4 ways to pay a competitive salary this year
Estimated Read Time: 4 minutes
The salaries of your staff should never be viewed as an expense, but as an investment.
And only by investing wisely, will your employees love what they do and reward you with their best effort.
A company is more than just a name and an office space. In fact, without its people to propel it forward, a company is just a mere shell.
With staff turnover rates returning to 2019 levels, according to recent Ministry of Manpower data, employers cannot afford to overlook staff retention as part of the pandemic recovery strategy. Regardless of whether your organisation is on the Fortune 500 list or has a low headcount, the turnover rate is likely to be high as long as employees are not satisfied with their expected salary. A top factor for employee satisfaction is receiving a competitive salary.
Here are four reasons for why paying a competitive salary is important and why offering less might actually be more costly for the company.
1. Invest in your people
Let’s approach the issue at a positive angle – a competitive salary package incentivises employees to do their best for the organisation, promoting staff cohesiveness and encourages loyalty.
Having proper salary policies in place is a tangible way for a company to show its commitment in taking care of their people, and this is likely to be reciprocated if and when the business finds itself in tough times.
The Robert Half Salary Guide offers an extensive overview on prevailing market rates for different positions in the Finance and Accounting, Financial Services and Technology sectors. You can even access salary data categorised by “Job Category” and “Job Title” with our Salary Calculator.
2. Talent might stay for pay
Top talent are frequently courted and poached by hiring managers and head-hunters – a process made easier these days with professional job networks such as LinkedIn.
Even if your top people love what they do, they may have no qualms flitting off to the next best offer if they aren’t being rewarded by a competitive salary.
Whenever key appointment-holders leave an organisation, project timelines tend to suffer, costing the company additional time and resources to resolve.
3. You get what you pay for
Hiring managers may get away with underpaying employees by leveraging the company’s brand name.
The downside is that people who are willing to work for low salaries at such brand name companies might not see it worth their time to bring value or optimal productivity to the organisation.
This practice attracts people who see the organisation as a necessary stepping stone to a better job, and will simply bide their time while looking for the earliest opportunity to leave for where the grass is greener.
4. The hidden cost of paying less
In the skilled and professional jobs arena, an employee’s departure can often cost their company more than double their annual salary, without taking into account the intangible cost of lost productivity.
Other sunk costs associated with losing an employee include the expense of hiring and training a replacement, or having to spend resources for onboarding programs.
These are financial repercussions that companies can avoid simply by instituting a competitive salary policy. A high turnover rate also reflects poorly on a company, impacting the collective knowledge base, and damaging staff morale.
Related: How to motivate staff
Take advantage of paying a competitive salary
As the employment market is constantly in flux, hiring managers should constantly evaluate and adjust compensation policies in order to be seen as a desirable firm to work for – one that pays competitive salaries.
A good perspective is to see employees as an appreciating asset. Sure, they may start off as a cost to the company, but satisfied employees who love what they do become more valuable over time as they accrue new skills, knowledge and experience.