There are limits to employee loyalty. You may have a good company. You may be a good boss. You may provide your employees with the type of work that engages them. But if you’re not keeping up with compensation trends, you may be wasting your time.
Consider this statistic: the U.S. Bureau of Labor Statistics reports that 2.7 million employees quit their jobs in February 2015, which represents an increase of almost 250,000 departures from February 2014.
Compensation could be a contributing cause of these high turnover rates. According to a recent survey by Robert Half, an international staffing and independent research firm, many companies are losing good employees for one simple reason: they’re not paying competitive wages.
Robert Half asked CFOs, “Which one of the following is most likely to cause good employees to quit?” and also asked employees, “Which one of the following is most likely to cause you to quit your job?” Their responses are as follows:
|Inadequate salary and benefits||28%||38%|
|Limited opportunities for advancement||22%||20%|
|Unhappiness with management||14%||16%|
|Lack of recognition or respect||12%||6%|
|Bored with their job||8%||10%|
|Don’t know/no answer||4%||0|
*Responses do not total 100 percent due to rounding.
In another Robert Half survey, 25% of CFOs revealed that in the past year they lost a good employee to a company that offered a job with higher compensation.
We spoke with Paul McDonald, Senior Executive Director of Robert Half, about current compensation trends and the implications of the survey results. According to McDonald, highly skilled employees across various industries know there are more job opportunities, and they have increased leverage when it comes to receiving higher salaries. “Employers are facing greater competition for top candidates, and experienced candidates are receiving multiple offers.”
As a result, McDonald says employee retention should be at the forefront of every company’s radar, especially given the current market. “If a manager can't remember the last time wages were increased for their star performers, those employees may be ready to walk out the door.”
He recommends, “re-recruiting” your best employees before they get a better offer elsewhere, and says this can be accomplished by reinforcing the worker’s value to the organization and providing them well-defined career paths.
So how can you ensure you’re paying your employees at or above market rates?
McDonald suggests that managers regularly benchmark salaries against those of other companies in their region and industry to ensure they are at or above market standards. “Many companies are making proactive adjustments now, through salary increases as well as promoting from within, to keep their best and brightest employees.”
Managers can also consult industry reports such as the Salary Guides from Robert Half. Using these resources can help to ensure you’re paying attractive salaries to your best workers.
In addition, McDonald advises mangers to check in with their employees, particularly about benefits, to ensure that what the company is offering is valuable to workers. Take internal surveys to discover which incentives are most important to them.
But suppose your company is below the market average and not in a position to offer raises? Does this mean you’ll have to kiss your best workers goodbye? Not necessarily, but you’ll need to focus on creating a really great work environment. McDonald offers three tips that can help to improve employee satisfaction:
Money isn’t everything, but realistically speaking, it plays a very important role in determining the type of lifestyle your employees can enjoy. Paying above – of at least at – market levels can help you retain the brightest and best workers. And if you can’t be known for paying the best wages, aim to have the best workplace to keep your employees happy.