Challenges that come with Low Pay Rates
Low pay rates can have a devastating impact on productivity, morale, retention rates, and the ability to attract top talent. It is supported by research. There was an online survey in 2018 with over 2,100 people located across the U.S. to determine how pay affects job search, job satisfaction, and retention. These are some of the key takeaways.
- The most important thing for job seekers is pay. More than 85% of job hunters rated compensation/pay as “extremely important” when searching for work.
- Pay rates are directly related to job satisfaction. Survey respondents rated pay rates as “extremely important” for their job satisfaction in more than three quarters (76%)
- Turnover can be reduced by raising pay rates. According to a survey, the number one reason job seekers quit was for higher pay. You can retain more of your top performers by proactively raising pay rates.
What is the bottom line? Your business will benefit from employees who are well paid.
Employees who are paid fairly have higher productivity, efficiency, engagement, loyalty, and overall better bottom line. If you feel that you are constantly “shopping” for parts to fix your company’s engine or if the gears don’t move as they should,
Assess your business’s pay rate situation using the following questions to get insight as what is the right thing to do:
- What can you do to make sure your staff is receiving the best compensation possible?
- Are you paying enough for your employees to be effective in a competitive job market?
- Are your employees happy with the current salary or could they be lured away by a competitor?
Review your pay rates. Take into account the following:
Salary survey data.
You can find the most up-to-date information about pay rates for your roles and geographical area by doing some searching.
How much are other businesses in your vicinity paying?
Your local chamber of commerce or business networking group can provide additional information.
The talent market conditions.
How many qualified candidates are there? You will need to pay more to attract qualified candidates if the market is tighter.
High turnover and decreased performance are the real costs.
How much does that affect your business? A small increase in the pay rate could make improvements that are worth many times their cost.