You are here > Home > News
HR: The employee remuneration dilemma
HR News |
22/12/2011
Employers may attempt to convince themselves otherwise, but the employment benefit workers are most concerned about is salary. Added extras such as training, extra holidays and flexible working schemes may play a role in engaging staff, but in a difficult economic climate, the buck stops with employee pay. Workers want to feel as if they are receiving a fair wage for their daily exertions, and that their employer recognises their achievements over time with reviewed terms.
But with profit margins tight, pay rises have been hard to come by in recent years - outside the boardroom at least. With companies fighting to remain in the black, employees have had to put their own pay agenda to one side and in many cases do more for the same level of reward. For some, simply having a job during difficult economic times is enough to keep them motivated and engaged. But for other professionals, particularly those with in-demand skills and experience, the need to feel suitably rewarded remains at the forefront of their thoughts.
The problem for employers is that losing staff costs them money. Once an individual leaves the organisation, no additional return can be achieved on the investment made in their recruitment and development. Not only this, but the worker may need to be replaced from outside the organisation. Costs are incurred by advertising the job, interviewing candidates, waiting for the selected individual to work their notice period and then training them up to the required standard. And there is no guarantee that the replacement will choose to remain with the company in the long-run.
Skilled, experienced employees who know their job inside out tend to work efficiently, independently and productively, making a significant contribution to organisational output without the need to be micro managed. As such, it is in the organisation's interest to ensure employees are engaged, happy in their role and willing to commit their future to the company. But the workers companies wish to keep are inevitably the same ones that other firms would like to poach, meaning such individuals have a stronger bargaining position when it comes to pecuniary matters.
For this reason, businesses and organisations cannot afford to have a blanket no-pay-rise policy, no matter how difficult the market conditions are. If worker A is twice as productive as worker B, it is clearly imperative for the company to keep them on the payroll. Assuming the employee appreciates the value of their contribution, they are likely to seek a reflection of this in their pay packet. But few workers would expect to be paid twice as much as their colleagues in the same role, and this is to the employers' obvious advantage. By making a small gesture to their best workers, even in terms of a relatively modest pay rise, they can show their appreciation and help engage the talented individual.
Put simply, HR departments need to think carefully about which employees they can and cannot afford to lose, and consider the issue of pay rises on a case-by-case basis. There can be a presumption against the increasing of salary, and other benefits such as increased training and additional holiday should perhaps be offered first. But ultimately, employers must be prepared to go the extra yard with pay if they want to make the most of growth opportunities.
In the present economic climate, it is not just a case of employees wishing to improve their financial standing, and feel as if they are progressing in their careers. High inflation over the past two years has slowly chipped away at employee earnings, with the rising cost of goods leaving them with less disposable income. And with many companies operating with reduced headcounts, forcing employees to work faster, harder and longer, there is a basic issue of fairness. The least talented, diligent employees can expect in the current climate is for their salary to increase in line with inflation. Companies which ignore this fact risk losing their most valuable staff to a rival, or seeing productivity ebb away as morale and motivation deteriorates.
Employers have had sufficient warnings. Research conducted by the Chartered Institute of Personnel and Development this year revealed that employees are placing increased emphasis on pay and benefits. In a survey of 2,000 employees, more than half of workers (54 per cent) said their top reason for wanting to change job was to increase their salary and benefits. Employees are feeling the squeeze just like their employees, and unless there is the prospect of increased pay as reward for good performance, they are likely to walk out the door.
Clearly a balance needs to be found. If companies ignore their bottom line and offer pay rises they cannot afford, the next step is likely to be redundancies. So in this sense, workers should perhaps be careful what they wish for. But equally, a refusal to consider pay awards has the potential to choke productivity and suffocate growth. So as 2012 approaches, employers should be considering a full range of options, including performance pay schemes, cross-organisation awards in line with inflation, and a flexible, meritocratic approach to employee earnings.
Posted by Jon Aspinell
------------------------------------------------------------------------
HR Recruitment Agency - Transparent Recruitment Fees Since 1999 - 12.5% Fee / 3 Month, 100% Rebate.
Sign up to our e-newsletter service to receive our headline news directly to your inbox
