How Often do You Re-Evaluate Your Employees’ Worth?
It’s only too easy to fall into the habit of putting pay reviews into the ‘things-we-do-annually/quarterly/wheneverly’ box, and seeing them as nothing more than ‘just another HR process’.
But although having scheduled pay reviews can be a good thing, how often do you actually look at them for what they really are? I.e. an evaluation of how much each employee is worth to your company.
If you’re not careful, failure to truly evaluate the worth of each employee could lead to an increase in turnover – especially when you consider an article published by Forbes last year:
Employees Who Switch Jobs Enjoy Better Pay Rises
That’s right – according to the article, employees who stay with the same company for 2 years or more are likely to end up being paid 50% less than employees who switch jobs more regularly. Why? Because in most cases, it’s easier to find a new job with better pay than to squeeze the equivalent pay rise out of your employer.
Here’s how the article explains it:
– The average pay rise per year for staying with the same company is 3%
– The average pay rise for switching jobs is 10%
– Over a 10-year career, the person who stayed with the same company will end up earning 50% less than the job-hopper
If these figures are correct, then it seems that people are actually being punished for their loyalty. So how can you fight against this trend?
Pay Your People What They’re Worth
It’s a simple solution, but one that many employers are reluctant to take: step away from the mind-set of seeing salaries and pay reviews as challenges in clawing savings and increasing profit margins; instead, sit down and work out how much a person is worth to your company.
Or even better, ask them! What’s wrong with having an impromptu chat with somebody and asking them “do you feel as if we pay you enough?” or “how much do you think we should be paying you?”? Are you afraid they’ll ask for too much? Afraid it will put ideas into their heads? Well you shouldn’t be afraid – at worst, it’s going to lead to a polite “sorry” from your end. But at best (and in most cases) it will show them that you care about their contributions to the company, while giving you a way to explore how your people feel about their jobs.
Your people matter. Do you want to improve retention? Then pay them what they’re worth.
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