Annual salary increases are a given in certain large corporations. This strategy isn't always feasible for small enterprises or start-ups, but that doesn't rule out the possibility of wage raises for your employees.
We will discuss some of the reasons why you may or may not give a salary raise to your employees.
Why you should give your employees a salary raise
The rationale for raising someone's salary varies depending on the circumstances, but it usually has to do with employee retention, rewards, or growth.
It may be a good idea to give your employee a raise if they meet the criteria below:
- they constantly create leads or sales, which helps to earn revenue;
- you have given them extra responsibilities, or they're going above and beyond their responsibilities;
- they demonstrate a good work ethic and have a professional attitude;
- they have been loyal and dedicated to your business for a long time;
- your employee has a great deal of future potential;
- their abilities, knowledge, or experience are vital to the company's performance, and they offer value in a way that would be detrimental if they left.
Rewarding deserving employees can benefit a business by increasing employee retention, satisfaction, morale, as well as gaining loyalty. While limiting the time, effort, and money spent on recruitment, you can cultivate a happier, more engaged team for your business.
Things to think about before giving salary rises
The first important consideration is if your business can afford to grant salary increases to its employees. We've already discussed how it's a terrific approach to foster a stronger and more positive business culture, but there are many aspects to consider before giving pay rises.
Impulsively doing so may put your business at risk. The following list will highlight some of the things you should think about:
- Other contributions can be effective
You can make them feel appreciated in other ways if you cannot afford to give them a raise. Movie tickets, extra vacation days, restaurant gift certificates, and company outings can all boost morale among your employees.
- Timing is important
Setting key performance indicators (KPIs) for each employee pays off. Determine what you require of them in order for the firm to succeed. Then go over those KPIs with each employee to make sure they understand what is expected of them.
You must keep in mind that data can only tell you so much and you should also try to comprehend how your staff are feeling through other means such as personal consultations and meetings in order to gain a better understanding of how they are performing within the company.
This is a great way to build rapport with your own employees thus contributing to stronger company culture.
- Giving an appropriate increase
Employees will talk even if you want total anonymity surrounding the topic of wages, you should expect your employees to find out how much their coworkers are paid despite that.
Look for data on the average wage increase, but keep in mind that it varies by industry and profession. Consider it a decent place to start. You can choose whether some employees are deserving of more or less.
Are there any consequences of NOT giving my employees pay rises?
If you don't pay your employees what they're worth, they'll start seeking employment elsewhere and it may be your competitor who could potentially take in your best employee.
This places you in quite a difficult position since you will not only lose your finest personnel, but you will also have to hire new individuals, which is a difficult and expensive operation.
Raising your employees' pay demonstrates that you value them. If you want the greatest work from them, you should consider giving them a salary raise. To determine when and how much to give your employees a raise, consult with your accountant and refer to your own management skills.
You must always keep in mind that you cannot run a firm without dedicated personnel. Giving the appropriate raises at the right time is simply one aspect of successful management.
We at Persona Finance understand how overwhelming it is to operate a business during the Coronavirus pandemic, and giving pay rises may not be a top priority for your business right now. However, we aim to provide remote accounting services to simplify your overall business needs. For more information on our services, please contact Persona Finance at [firstname.lastname@example.org].