5 signs that tell it's time to revise pay structure

Money is the first and the foremost thing that most employees look at while applying for a job. And, to a great extent, it’s a very important factor that will decide whether the employee will stay in his current job or move on to greener pastures.

Most companies may not change their pay scales every six months but employers need to look at their compensation levels in a timely manner, just to ensure that they keep abreast of the market trends and not lose out to competition, especially when it comes to human capital.

At the end of the day, most managers understand that well-paid employees produce more profits, with reduced turnover rates, and this all means a healthy business. Here are some telling sings that let you know it’s time to do a survey of your current staff salaries and benefits.

1# Are the majority of your employees under-performing?

Money is an important source of motivation and well-paid employees try their best to justify their salaries. There may be exceptions to this but when employees are unhappy about their pay, they see no point in working hard as they believe that their effort will not be compensated.

If you see majority of your staff under-perform, it's one strong signal that you need to look at your compensation plan. Perhaps, it needs a redo and if you do this, you will see profits improve.

2# Do you suffer from high absenteeism rates?

Under-productive employees coupled with high absenteeism rates will make even a thriving business suffer.

If people believe they are not compensated fairly they will not miss a single chance to take off from work, which only impact the bottomline adversely.

3# Is employee turnover bothering you?

No company would like its employees to leave them, especially after having invested time and money in them. Yet, many employers complain they suffer from high turnover rates and this is constantly annoying to them.

If you also suffer from lower than usual retention rates, especially when it comes to entry and mid-level employees, perhaps it’s time to get to the root of the problem. This may mean looking at your compensation programme. It could be the trigger.

Employees will stay with you due to lack of options but the moment a better paying job comes their way, they will immediately move out. If you want to keep a loyal workforce, it is very important that you pay your people what they are worth.

4# Always reward performance

It’s very important that you don’t let your best people stray away. And, for this, you should have a strong link between pay and performance. Even if your budgets do not give you the flexibility to reward each and every team member, do not skip your best people.

These are the ones who deserve to get more than the average employee. And, these are the very set of people who will move out if not compensated for the extra effort they put in, whereas the average and under-performing will stay with you.

5# Keep abreast of market trends

In a world of demand and supply, you have to compete with other players in the market. If eight out of 10 companies are paying more than you, your employees will eventually move out.

Better paying employees tend to poach on competitors and if you don’t want that to happen, you have to align your salaries within the same band.

The smart and best employers will have their compensation programmes designed in a manner to attract high performance staff.

If one, more or all of these signs have been bothering you, take note and steps to protect your organisation. Don’t cringe in giving people what they deserve. After all, human capital is the most important aspect of any business and as a business person you don’t want to lose out on your assets, so compensate accordingly.

 

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