Shawnee Love •
April 13, 2010
I have gone on about retaining and motivating employees all the while ignoring the elephant in the room that is wages. People often believe that money = happiness, and it isn’t a stretch to assume that companies must pay more to make their employees happier; however that simply isn’t true.
Bottom line: You have to pay fairly. You only have to pay more if you aren’t currently paying fair wages. Study after study and my own personal experience have shown me that in the long run, all things being equal, if you pay fair wages, then you will keep good employees.
The trick is to make sure you are paying fairly, and to do that, you must do two things:
- Confirm you are paying your employees fairly according to the market.
- Validate you are paying your employees fairly in comparison to each other.
In larger companies, to do these two things well, you need a system that includes job analysis and evaluation and a compensation strategy which you implement consistently and correctly. However, in smaller companies a quick scan of the job ads to check out going rates and a review of your payroll records might suffice. Either way, if you can with confidence say that your people are being paid fairly, then that is one more aspect in your favour for retaining your employees, and one less thing you have to worry about. At least until you need to hire someone from another market, but I will leave that can of worms for another day.