Whether you’re a recruiter for a cyclical business that’s sensitive to economic downturns or a manager at a low-margin concern that can’t afford higher labor costs, it’s easy to justify low starting salary offers and paltry raises. Unfortunately, being cheap with your most valuable assets is unlikely to pay off in the long run. Before putting up your next job posting, consider the benefits of paying new employees what they’re worth.
1. Attract Great Employees
Any seasoned recruiter will tell you to control the quality of your applicant pool by offering fair pay in your job postings. You don’t have to deliberately outdo your competitors, but you shouldn’t be afraid to quote starting salaries that beat the local median by a healthy 10 or 15 percent. Since hiring time is the best time to screen for potential under-performers, it’s on you to entice your market’s very best prospects with solid compensation.
2. Encourage Hard Work
While you might sign your payroll checks without much thought, you can bet that your employees hang on every dollar they earn. If they feel valued, they’ll work harder to meet deadlines or fill quotas. If they feel cheated, they’ll watch the clock and ignore the initiative. Simply put, fair compensation boosts productivity. You might have to pay a bit more upfront, but the long-term jolt to your company’s revenues and earnings will make it worthwhile.
3. Retain Your Rock Stars
Don’t assume that poorly compensated employees will be too timid or complacent to abandon ship. Short-sighted employers often go on cut-rate hiring binges during economic downturns. Imagining that they’ll lock in high-quality employees at low salaries on an indefinite basis, they fail to adjust to changing market conditions by upping their initial offers or giving long-delayed raises. If you follow this path, you’ll find yourself unable to attract new hires to offset the exodus of your most talented veterans.
4. Office Gossip Can’t Be Quashed
It might seem sensible to pursue aggressive starting salary negotiations, but this tactic often causes problems down the line. Don’t force new hires to settle for their bottom dollar. More importantly, don’t make wildly divergent offers to two otherwise identical employees. Your firm’s non-disclosure agreement won’t stop chatty workers from gossiping about their compensation and benefit packages. Once word gets out that you’re varying the size and scope of your starting offers, you’ll find yourself staring into Pandora’s Box.
Fair compensation packages are the backbone of a happy, stable workplace. By offering fair market value to your new hires, you’ll boost productivity, pad your bottom line, and ensure that you retain the most talented and capable employees on the market.
