Let’s face it, every body wants to be paid a little bit more and noone in their right mind would turn down a payrise if offered, so you can never expect to have a situation where an employee is totally satisified with their pay. But, what you can do is create an environment where employees feel they are being paid fairly in terms of the: market rate, other staff and the company’s ability to pay.
1. Check the milometer regularly.
Benchmark your salaries against the competition about once a year to see how close you are to market rate. If you are way below market rate for your size of company, staff could be feeling short changed and you could be getting a reputation for being a ’bad payer’. Try and pay on or around market rate.
2. Pay the living wage.
There is of course a national minimum wage that you all need to follow, but certain places like London have a higher ‘living wage’ which is still modest but is the minimum that employees need to live on in your area. It will enhance your reputation both within and outside the company if you do this.
3. Show that your reward system is fair.
Now, this doesn’t mean you need to publish salaries on the intranet, but document how pay levels are calculated. Is it on market rate or just below market rate? Are some roles paid higher than market rate? If so, explain why. This will show your system is fair which is important, as reward systems that are not perceived to be fair are demotivating.
4. Avoid favouritism.
If staff are doing the same job, the law says they should receive the same compensation. Of course, if someone is more productive or effective than another person in the same job they can be paid more to compensate, but it must be justifiable and not favouritism. Favouritism will also drive down motivational levels
5. Recognize high performers.
If you don’t recognize high performers, they’ll either adjust their effort so they don’t perform better or they’ll leave for an employer where they feel appreciated. Measure performance and make sure that part of the staff pay is performance related.
6. Pay bonuses quickly.
Studies show that the closer in time that a reward occurs to the behaviour that earned the reward, the more powerful an incentive it is. So, pay sales commission monthly, and employee’s bonuses quarterly if possible to boost the motivational effect.
7. Reward teamwork too.
Your business will be stronger together and while you want to encourage individual contribution, you want to discourage individualism which occurs at the expense of teamwork or other worker’s performance or the net effect could be a reduction in overall output.
8. Equal opportunities.
If staff feel there is a glass ceiling and that higher jobs are given to favourites, they will perceive a lack of promotion opportunities, and studies show this is one of the main reason people leave. Always advertise internal roles to all staff.
9. Have contests.
If you want to encourage a specific behaviour such as more sales this month, have a contest with a cash prize to boost motivation levels.
10. Have a pay ladder for each role.
Create a pay ladder for each role with individual pay levels corresponding to: certain productivity levels, developing new skills or staying with the company for a length of time. This type of reward will motivate staff to improve their skill and performance.