Retaining Top Talent: Think Beyond “Show Me the Money!” | Rea CPA

Retaining Top Talent: Think Beyond “Show Me the Money!”

Pay Raises | Retaining Employees | Rea CPA

Since 2021, many companies have had to pay higher salaries or wages to get new employees in the door and fill the gaps for labor shortages across the nation. But as the employment landscape changes so do the strategies required to gain and retain top talent. According to Forbes, as employers continue to hand out pay increases, more employees begin to look for jobs elsewhere seeking higher pay, creating a vicious cycle.

For some organizations, increasing wages across the board is just not an option. The problem with hiring new employees at higher wages is that it creates a wage disparity between new employees and current employees, perpetuating the labor shortage. Employees, feeling undervalued, leave to seek jobs with new organizations believing they can find higher-paying jobs elsewhere.

That said, you should consider whether a cost-of-living wage increase makes sense for your employees, your business, and your budget. You will need to think about the projected increases in living wages, but not offering inflated salaries as the solution for drawing top talent.

Consider the Whole Package

All the pay increases in the world cannot make up for poor work cultures or toxic work environments.  While pay is a fix, it isn’t the only fix, nor is it the long-term solution. Unless wage increases are paired with other changes, there will likely be lower profitability and productivity. Pay increases can stand in the way of maximizing the skills and growth of current employees.

Things like additional benefits, profit sharing, 401(k) and paid time off are all things that candidates should consider when applying. Alternative ideas like programs created for managing performance and generous referral programs for bringing in new employees are also great ways to fill labor gaps while retaining current employees, rewarding both.

It’s important to keep your finger on the pulse of the people. What do employees want? While younger generations trend toward asking for higher wages and what will benefit them right now, older generations and people with more experience in the workforce are asking for things like good work-life balance. Wellness becomes a consideration, so things like insurance benefits and retirement are important incentives.  The true test of any employer is going to be putting together the whole package: competitive salaries, competitive benefits, and matching job duties with salaries that are realistic for the market rate. More importantly, if the company is offering great wages, but does not provide growth opportunities and positive work culture, what is the likelihood that a candidate will feel satisfied in their career long-term?

Offer Learning & Advancement Opportunities

Training and development are as much a part of the total package as salary. And if no one has ever emphasized this point before, here it is ­­­­– cross-train employees! Job skills outside of the employee’s typical job description benefit both employee and employer. The employee gains valuable skill sets and can move into other positions, filling potential vacancies and improving their value. This allows growth for the employee not just to move up into a new position and pay rate. This builds loyalty from your employees allowing for better retention. Educating your employees and promoting from within is the best course of action when possible, especially when considering the long-term investment from your company and the benefits of having well-rounded and educated employees.

For those concerned with increased wages and the cost of doing business when inflation is on the rise, buckle up. There is no quick fix. Commit to being in it for the long haul. You must be proactive and find other incentives by thinking outside of the box. You should know what sets you apart from your competitors and develop a plan to market to potential candidates using those differentiators.

While this is not a comprehensive list of the dos and do nots of wage hikes, there are several strategies to keep in mind as things continue to change in the HR world.  For questions on human resource management, please contact Rea & Associates, we would love to speak with you.

By: Renee West, SHRM-SCP, PHR (New Philadelphia office)