As we prepare for 2020, many companies are beginning to make plans for salary increases and compensation strategies to attract and keep top talent. The only problem is that US salary budgets are not projected to increase much in 2020. According to Stephen Miller, Online Manager/Editor of Compensation & Benefits at SHRM, “Salary-increase budgets for U.S. employers are projected to grow next year by just 0.1 percent above the actual average budget increase for 2019, confirming that wage growth isn’t accelerating much despite record-low unemployment.” So how can companies with low or nonexistent salary-increase budgets expect to secure and keep top talent? Well…it’s time to think outside the box.
Taking a More Holistic Approach
Simply put, many companies are just unable to make salary increases across the board. Some are taking a more holistic approach to salary increases, reserving them for top talent, employees with highly sought-after skills or instituting a variable pay system. “Traditional merit-based pay systems often reward mediocre performance, whereas a variable pay strategy rewards those employees who add the most value to the organization”, said John A. Rubino, SHRM-SCP, founder and president of Rubino Consulting Services.
Money Isn’t Everything
Providing a salary increase is great, but it is only one component of an attractive compensation package. Consider giving more than a pay raise. Employees are not motivated by money alone. According to Scott Cawood, President and CEO, WorldatWork, “Organizations that deliver benefits like paid time off, flexibility, and paid parental leave—benefits that provide a great work experience and a great life experience—are often valued higher by employees than other rewards like salary or health benefits.”
If you are looking to reward your top performing employees but do not have the budget to provide salary increases across the board, here are some alternatives you may want to consider:
- Promote rising stars. Review your top performers and find ways to increase their pay based on performance or increased responsibility.
- Assign a new improved job title. Many employees want to move up in a company and receive new responsibilities. A new job title rewards their work and increases morale.
- Increase PTO days or add a special holiday. A good way to reward employees is to provide extra personal days off or add an additional holiday or two. A “holiday” could be the employee’s birthday or anniversary. This rewards your high performers by giving them extra time to do the things they enjoy doing outside of work.
- Consider working from home options. More organizations are allowing employees to work from home full-time or part-time. This is an attractive option for many employees as it provides flexibility and options when managing their personal and professional lives.
- Increase or add a company benefit such as a 401k match. Investing in retirement benefits is highly sought-after by today’s employees.
- Add a new policy for maternity and paternity leave. Consider implementing a paid or extended maternity/paternity leave policy. It shows you value your employees professionally and personally by supporting what matters most to them. It also gives them the time needed to acclimate to the changes in their family and make arrangements for when they return to work.
- Loosen up on your dress code. Consider a dress down day or a themed day like “sports day” or “spirit day” where your employees can wear memorabilia from their favorite sports team. You can have ugly sweater day for the Holidays. Be creative. You may still want to set some parameters, but it is a fun way to spice it up and have some fun.
- Offer employee training. Employee training shows you value your employees by investing in their skills and job growth. It also can increase morale and loyalty.
- Implement an employee recognition program. Give them a shout-out for their birthday. Celebrate your high performing employees by recognizing them publicly within the company.
- Provide a mentor program. Employees looking to move up may be interested in knowing how others achieved their success. Consider pairing employees with those in upper management for advice and helpful resources.
When choosing what to include in your compensation strategy for 2020, it is important to note that your employees are looking for more than just monetary compensation. If you are not sure what would be valued most by your employees, ask them to complete an anonymous questionnaire. Asking them for their input will also make them feel valued and heard.
If you are looking for other resources and tips to finish the year strong and plan for 2020 with your human resources and recruiting strategies in place, check out our recent blog, “Are You Ready for 2020?”. If you would like additional advice on this topic or would like help developing an attractive compensation strategy, click on the link below!