When it comes time to hire new employees, you can expect there to be a conversation, at some point, about pay. Negotiating a starting salary is a typical move from candidates looking to see if they can get a higher rate of pay, but it might be to your company’s benefit to increase the starting wage even if you’re not asked to do so.
The truth is, the wages you pay your employees, whether they’re brand new or celebrating their 10th or 15th anniversary with your company, will have an impact on the kind of new employees you can attract and the number of employees you can retain.
Competitive wages can make all the difference. Here’s why.
- First, what is meant by competitive wage? Let’s start at the beginning. A competitive wage is one that is on par with what other companies in your industry are offering for a similar job title or description, to an employee with similar experience. It’s important to know what others in your industry are paying their employees, partly so you don’t underpay a new hire and, more importantly, to prevent your current employees from being lured away by the competition for higher pay.
- Competitive pay might mean more than just dollars and cents. Employees these days are looking for a good salary, of course, but they also want a good benefits package. Both pay and benefits are included in an employee’s overall compensation package, so all forms of payment for services rendered should be tallied and included when making someone a job offer. For employees that have been with you for a while, if they ask for a raise, especially if you need to turn them down, make sure to have a breakdown handy of their full payment package to show them how much they’re making when insurance, PTO and other perks and benefits are calculated.
- Pay attention to raises and bonuses. Most employees believe they’re set up to receive a raise every year. Even if it’s a small one; a raise is viewed as a reward for a long year of hard work and as a sign of appreciation for helping the company succeed. For companies that give across-the-board raises of a fixed percentage, make sure you know how much your competition is providing to their employees — if someone’s giving their team 10% raises, or a fixed dollar-amount pay increase, you can bet your employees will balk at anything less. You might need to get creative if you don’t want to see an exodus.
- Higher wages are a reward for loyalty. Be clear about this: Employees who have been with you for a number of years deserve to be rewarded for that. It’s rare for people to stay in their jobs for decades anymore, as people are looking for different opportunities or the chance to do something new. If someone has decided to stay with your company, that’s one less person to have to be replaced, one less person to need to be interviewed and hired and trained. Reduced turnover is a cost-saver for your company; giving employees a raise to keep them happy under your roof will likely be less expensive than having to hire a whole new group of employees.
- Competitive wages help you stay in the conversation when it comes to talented candidates. The world is changing and candidates now expect to have information on pay much sooner in the interview process. If you’re offering a starting salary or benefits package that’s less than your competition, word will get out. You’ll miss out on highly talented, skilled employees who might otherwise bring a great deal to your team; other people will hear that you’re a low-paying employer and they’ll bypass your job postings altogether. The inability to hire new employees to fill openings will inevitably lead to more frustration among the current employees who have to work harder to make up for being a person (or more) understaffed, and one day they, too, might look for better pay for their work elsewhere.
If you want to attract top talent and keep the employees you’ve already trained and invested in, you need to pay them what they’re worth. Competitive wages are the best way to keep your employees happy and under your roof!
If you’re looking for more advice on improving your employee retention numbers while bringing in great new candidates, contact Davis Staffing. We’re ready to help you meet our candidates, who are eager to get to work right away, and help you find new ways to provide all your employees with a great pay rate. Contact Davis Staffing today and let’s get to work!