Can't pay massive salaries? Do this instead08th September 2021
In my last blog, I mentioned that one of the railway companies I’m involved in lost their chef...
He was poached (no pun intended) by another company, which doubled his salary.
It not an unusual story right now. The labour market is quite unstable and lots of companies are experiencing staff shortages at all levels, driving up pay packets.
The Office for National Statistics (ONS) has estimated that between February - April, average earnings rose by 7.3%. And even excluding distortions caused by the pandemic, there was a growth of 3.9% - 5.1%.
Now, you might be able to give a bumper pay rise to a handful of staff.
But if you need to hire new people and are affected by this trend, you might not be able to afford for your payroll to swell significantly. Chances are this is already your largest expense!
How, then, can you continue to attract good people?
When it comes to top talent the largest companies either stump up the money or find a workaround, offering aggressive stock options or bonuses that they won’t have to deliver for some time.
That may not be an option for you, and it’s certainly not an option for lower skill workers.
So here’s another option: Improve the benefits package that you offer.
Granted, even the best benefits package won’t compensate for really poor remuneration, but it can certainly help you stand out in a competitive situation and in many cases can tip the balance in your favour.
The secret, though, is not to offer random benefits...
...or benefits that sound good on paper and are cheap for you to offer, but aren’t actually any good.
To help attract the staff you want, you need to consider what benefits they would find genuinely attractive.
That means really understanding the type of people you’re trying to hire and often creating a choice of benefits to appeal to different segments.
For example, the sad truth is that good life insurance probably won’t appeal to people in their 20s - even though they probably need it and it can keep down the cost of purchasing their first home.
But it might be very appealing to a slightly older crowd who have a young family and have started to feel the responsibility of taking care for their loved ones.
Similarly, people in their 40s and 50s may appreciate access to retirement advice, workplace ISAs if their pension contributions are for some reason restricted, and generous pension plans.
Younger people, on the other hand, might be attracted to flexible work conditions, to gym memberships, or even to Give As You Earn, which allows them to give to charities and supports their social conscience.
It’s best if you can find a range of options which benefits both your staff and your company. You’re paying for these so it’s reasonable to ask that they’re good for you too!
That’s why we provide private health insurance for our staff.
They like it. I prefer to take care of my team’s health - it’s part of my responsibility to my team. And it’s good for us if, when they do feel unwell, I know for certain that they can access medical care swiftly, because they’ll be back at work faster.
Considering how you’re going to pay to attract good people isn’t something you can do “when I get round to it.”
It’s critical to the future of your business - both because you need top people on your team, and because it directly impacts your bottom line.
It’s just good financial management.
And it’s what we do with our clients, as part of our work to ensure that they continue to grow smoothly and maximize profitability.