Last year, inflation reached its highest pace in four decades, driving up the everyday costs of living, from food to energy to almost everything else. This has led employees (understandably) to seek ways to cover these increased expenses, likely pushing them to ask you for a higher salary to deal with the situation.
Here’s the problem: things have gotten more expensive for you too. In general, companies have been able to raise prices during the past couple of years. Still, with inflation and supply chain snarls, you’ve faced your own challenges recently.
Yes, you’ll likely need to give raises to keep your best employees. One study found that a quarter of companies gave raises of over 6% in 2022, with two-thirds of organizations issuing increases of a least 4%. But even with some concessions, you might not have the budget to give your team the raises they think they need.
How do you deal with this impasse? It’s important to have a communication strategy to go along with your budgeting decisions. That way, you can keep your staff engaged and inspired, even while you manage their salary expectations. Here are some tips to help you along the way:
Managing Salary Expectations in Your Organization
Know Your Facts
You want to provide a competitive salary. If you don’t live up to market expectations, it’s only a matter of time before your best talent gets lured away. But how do you know what “competitive” means at any given time?
Understand the market forces at play as you look to manage salary expectations. This way, you can make a rational argument when the topic of pay comes up. You’ll know where you stand compared to the other options available, letting you discuss the subject as comprehensively as possible.
Don’t just look at the external market forces while researching wages and the impact of inflation. Conduct an internal review as well. Understand your employees’ feelings on the matter and use this information in your considerations.
On this front, you can take both a general and specific approach. Utilize employee surveys to gather information about your staff as a whole. At the same time, maintain healthy communication with individual team members, especially those you want to keep for the long haul.
Determine a Policy
With the information you’ve gathered, develop a policy of how you want to handle raises, bonuses, and other compensation-related decisions. Build out a general hiring and retention strategy. Having this overarching scheme will make it easier to make individual decisions.
A well-considered policy will give you guiding principles as you move forward. This will minimize the chances that you’ll overreact to unexpected requests or make choices you’ll later regret.
Talk to Your Team about the Issue
Once you’ve determined an overall strategy, you can apply it to individual cases. Reach out to your team members to discuss the situation. Here are a few factors to keep in mind:
Set the groundwork before discussions of salary reach a critical moment. Don’t wait until annual evaluations or until a raise request. Instead, begin rolling out your policy as early as possible.
Your policy on salary should be consistent, fair, and transparent. That isn’t to say you should broadcast people’s compensation or deliver the same raises to each team member. But your decisions should be rational and justifiable within well-known company policies.
Target Your Top Performers
With a limited budget, get as much bang for your buck as possible. Focus your efforts on your best employees. That way, you can keep your core team in place.
Turn the Focus to Other Benefits
Salary is only part of an overall compensation package. Meanwhile, compensation itself is only part of the appeal you offer as an employer. If you are too strapped for cash to deliver the paychecks your employees desire, turn the attention to other upsides you can provide. These can include:
- Flexible Schedules
- Remote Work Possibilities
- Advancement Opportunities
- Strong Culture
Looking to Add the Best Candidates to Your Team? ABLE Can Help!
Setting salary expectations is all about finding value. Having top employees makes it easier to deliver higher salaries because you know that investment will pay off in the long run. A top recruiter, like ABLE Associates, can deliver the best candidates available.
Contact ABLE today to upgrade your team-building process.