This blog is a part of the series on Attracting, Motivating and Retaining a high-performance team.

In a previous blog I mentioned that back in March 2023 Seek New Zealand interviewed 4000 employees and discovered that some 29% were seriously considering leaving their employers within the next six months. They listed insufficient pay as the key number one reason.

Now given the highly competitive state of employment markets with a shortage of skills in a number of areas, it is clearly important for business owners and HR managers to seriously consider this matter. Sure, dollars is not the only reason for people joining or staying with a particular company - but it is a key component, particularly for the younger members of the workforce.

If you are not in touch, then face the risk of losing some key members of your team, with the implications of loss of continuity, cost of replacing, training etc. And not to mention that they may be donning a competitors' uniform!

So read on.

Important factors to consider in Salary Decisions when looking at New Hires

• Industry Norms: research benchmarks for your industry - average salary ranges for different positions. Websites like SEEK, PayScale, and the Australian Bureau of Statistics are helpful.

• Candidates experience and skills: OK, you want the best, but you may be on a limited budget. But there is truth in the old saying "you get what you pay for"!

• Location: Salary expectations are likely to vary depending upon location - an urban location like Auckland or Melbourne versus a rural township. But there may be a trade-off if a candidate is looking for flexibility with remote working?

• Your company size: pitch your salary offer according to what your business can afford and sustain, and if you’re in the early stages of business development recognise that you are unlikely to be able to compete on salary figures with larger competitors.

If this is your situation, then it is essential for you to look at the other factors that some applicants may be seeking – flexible working arrangements including hours, flexible schedules, working from home, a vibrant culture, opportunities for training and career advancement, health and wellness support, etc.

• Importance and relativities of the role: yes, research the “going rates” for your industry and location, bearing in mind the required experience and skills.

 But also have a good think on the real importance of the role for your company. There have been many instances in my career where I have not only agreed attractive non-financial benefits, but I have deliberately offered dollars that are 5 - 15% above the market rate. Money may not be everything I hear, but it can have a very big say!

I cannot recall ever regretting this approach. I attracted extremely good candidates who were a part of my team for many years, contributing a huge amount to our success. Quite frankly, I believe it is a mistake to be too tight! If the budget is that limited, then find efficiencies and savings in other areas to release the necessary funds to secure the top talent you need. And this may include pulling in your belt regarding the bottom line and dividend expectations!

A word of warning though - be mindful about relativities of pay across your business. Of course you will have Employment Contracts that require confidentiality, but we all know that things do get out. So be wary and insist that employees do not discuss their remuneration details with colleagues. You want to try to avoid difficult conversations that may arise with colleagues leveraging for an increase.

Managing Salary Increases for Current Employees

OK, you have got a great team on board, but you need to keep them!

I will cover in another blog the subject of motivation. But let’s recognise here that’s it is imperative that you regularly consider whether you are paying your current employees enough and that you take steps to address the situation.

If you do not have your finger on the pulse, do not be surprised if staff members become disillusioned, frustrated, complaining, and even angry on occasions - and start looking elsewhere. My experience also reminds me that once an employee starts looking for alternative employment, surfing the net job opportunities, then there has been a mindset shift which is very hard to recover. So look for the signs that people may be unhappy and looking - before it becomes too late.

The following are fundamental considerations when reviewing pay increases:

§  Employee performance.

 §  CPI inflation increases.

 §  current market rates.

 §  Minimum wage legal requirements

The topic of ‘performance’ as a vast and important area, and one that I will also cover in a future blog and on my YouTube channel. Suffice it to say here though that if you reward your employees for meeting performance standards, this is certainly motivating for the individual concerned, and can also help set the scene for continued excellence across your company.

So, wrapping up. There are many factors to consider when deciding upon what constitutes “fair compensation”. However, there is no doubt that this area requires regular attention and action. Staying up-to-date and well-informed can be the difference between hiring and keeping a good team or losing out to the competition. Enough said!

END

Neil Sayer