You Have To Compensate Employees
You’re probably familiar with the dreaded announcement: No raises this year — again. Announcing that a pay freeze is continuing is a messy business. Employees hate to hear it, and managers hate to be the bearer of bad news.
There can be a host of reasons why there isn’t enough money to reward people for their performance. When it comes down to a choice between paying the light bill and giving a bonus, the light bill wins every time.
But if you’re moving into the fourth year of pay freezes, it’s time to find a way to compensate employees for what they’ve done. Compensation isn’t everything, but if basic financial needs aren’t being met, employees can’t give you top performance. Compensation is a type of reward, and rewards show that the company recognizes the difference between great performance and poor performance.
If you’re treating everyone like poor performers by failing to reward them, don’t be surprised when that’s the kind of behavior you get.
Instead, think about how you can make small compensation changes that have a big impact. Try looking at your compensation plan with these ideas in mind:
Shake up the budget: Where can you shift some money around? Giving a 5 percent raise to everyone might not be possible, but finding a few dollars for bonuses could help keep your hard workers engaged. This is where you really have to match performance and rewards, because you’ll only have budget for the top performers.
Get consistent: Are you offering new hires competitive salaries while current employees’ pay lags behind? You may not have the budget to bring everyone up to market rates, but make sure there aren’t major discrepancies among similar roles. Help hiring managers understand compensation options and find ways to match internal salaries to preferred rates.
Find variety: If you think about compensation as a reward, there are suddenly more options. You can provide managers with flexible funds that can be used for spot rewards — like sending an employee to a conference or taking the team to a congratulatory lunch. Non-cash rewards can’t replace raises, but they can help your people feel appreciated throughout the year.
Just because an employee hasn’t left yet doesn’t mean their loyalty should allow you to hold back on compensation. Budgets are tight, but you should find a way to grant rewards to employees who deserve them. Hopefully, you’ll then drive improved performance, which might result in better opportunities to raise compensation in the future.