Increasingly, I am being asked by Oxfordshire employers questions around the right salary to pay their employees, so in this blog I plan to give insight into this incredibly important topic.
It has been highly reported the impact that the cost-of-living crisis is having on us all and it’s certainly worth remembering that employees on the same salary as they were 12 months ago will have c. 10% less in terms of buying power. In my blog last month about cost-of-living tips, I noted that I am hearing candidates almost daily needing more money from employment purely to pay their living expenses.
With this in mind, if you are able to ease the financial strain on your people by increasing salaries, I would definitely urge you to do so.
Having said that, after speaking to a number of the members at The Oxford Business Community Network, in many cases businesses are struggling to meet their monthly costs also. I have seen a couple of businesses over the last 6 months offer considerable pay increases to staff to tackle the cost-of-living crisis but they make large scale redundancies, so I would really encourage that you really plan and balance what the business needs with what your people need.
Having said all of this, it’s worth remembering that recruitment is expensive and as I explored in my September blog, the biggest cost of recruitment is when it goes wrong, I would encourage you to really work with your existing talent to ensure they are feeling fulfilled and rewarded.
In terms of how to define a salary for any given role, here are my top tips:
Consistency: It is so important that your people are paid consistently and fairly in line with their ability and performance. I so regularly see businesses paying new staff more than existing, which can cause huge problems. It’s worth spending the time and money to put together a structured and fair pay scale with clear reasoning behind each level.
Benchmark: Most good recruiters (us included) will be able to conduct a complimentary ‘salary survey’ to give you a sensible salary based on the local ‘market rate’ of any given role. We do this by researching a large number of similar vacancies locally but also by our on the ground experience of talking to local candidates and employers.
Act NOW: It is so important to ensure that all employees, whether they have been with the business for 4 minutes or 4 decades, are rewarded ‘market rate’ because you do not want them to feel unfairly treated when they see competitors paying considerably more. The moment a staff member explores an opportunity with another employer, it’s often too late.
Benefits: It is no longer just about the basic salary; things like a strong employer contribution to a pension can often be a huge pull for candidates and will really impact their later lives in such a positive way BUT in terms of value to a candidate now, other benefits can have a bigger impact. Things like hybrid working, lunch at work, childcare vouchers and an electric car scheme will often make a big financial impact now.
In summary, in my experience it’s so important to be consistent across your whole workforce but equally as important to ensure any working relationship is a win/win; your staff need to be paid fairly but it needs to be sustainable for the business or everybody loses.
I hope this blog has been useful and any questions please do get in touch.