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Competitive Compensation: Invest in Your People to Grow Your Business

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Why doesn’t anybody want to work for me? 

Could it be you’re not paying enough?

Look, I get it. Money is tight. Any time you raise pay, you’ve got to cut something else. 

But in case you haven’t noticed, the cost of living is only going up. Rent, food, gas — all the things you expect people to have so they can come to work — are taking a bigger and bigger bite out of their paychecks. 

Not everybody wants to be as rich as Jeff Bezos. But they sure as heck want enough to pay the bills and have a little fun once in a while. 

Even Bezos himself has taken notice. When Amazon raised its own minimum wage to $15 per hour, he challenged other retailers to match or beat that number, arguing that investing in employees is ultimately good for business. 

And other retailers are in fact, stepping up their pay game. Costco’s entry-level wage is also $15. Target went up to $13 in June 2019. Walmart has gone up to $11. 

In today’s job market, a competitive wage is a must for attracting the top-notch talent you need to thrive. You can start by learning what is a living wage in your area, why underpaying employees is a bad idea and how to offer competitive pay without hurting your business.

What, Exactly, Is a Living Wage?

In Kansas City, Missouri, a single adult with no kids must earn at least $11.29 per hour to make ends meet. If they have one child, that more than doubles to $23.88. Two kids? Bump that up to $27.95. 

You can find out how much they need in your market with the Living Wage Calculator

Invented by Professor Amy Glasmeier of MIT, it tells you what a full-time employee actually needs to cover basic necessities without having to turn to public assistance or charities. It accounts for a number of costs which vary by location: 

  • Payroll taxes
  • Food
  • Child care
  • Health insurance
  • Housing
  • Transportation
  • Miscellaneous necessities like clothing and personal care items

Why Do You Need to Offer a Competitive Wage?

Between the tight labor pool and new minimum wage laws popping up across the country, there are many factors putting upward pressure on pay. But attempting to resist the pressure by offering bare-bones wages will backfire.

  • Employees who can’t pay their bills often resort to taking a second job. They’ll get burned out, get sick more often, and will quit when a better-paying gig comes along. 
  • When employees are stressed out, productivity and customer experience suffer. This winds up hurting your bottom line. 
  • Consumers may take their wallets across the street when word gets around that you aren’t paying your workers enough. 

On the flip side, when employees do make enough money, they’ll be more motivated and give you better performance. You’ll see a boost in morale, customer satisfaction, less turnover and a shorter time to hire. 

How Can You Pay Enough and Control Your Costs?

Like so many other things in business, it makes sense to have a competitive pay strategy that benefits both you and your employees. Here are some steps for making that happen.

  • Do your homework. Find out what a living wage is in the markets where you operate. Research housing costs, as well as other common expenses like food, child care, healthcare, fuel, transportation and utilities. 
  • Level with your employees. Trust me, they’ll respect you more if you’re up front with them. They know money doesn’t grow on trees for you any more than it does for them. Remind them that if their pay goes up, you’ll need to lower costs in other ways. Empower employees to drive sales, meet productivity targets and achieve money-saving goals
  • Offer opportunities for advancement. If your starting wage is a little on the low side, let new hires know they’ll have the chance to earn raises as their skill level and performance increase. Your top performers will be more likely to stay if they can see a promising career path with your company. 
  • Consider gradual pay increases. If you’d like to offer a living wage but can’t afford to right away, phasing it in over a period of time is one alternative. 
  • Promote your pay increases to prospective hires and your customers. Remember, people like doing business with companies that treat their workers well. 

The bottom line is this: If you want employees who give more than a bare minimum of effort, you need to offer them more than bare minimum pay. Especially nowadays. Competitive pay is an essential part of your strategy for attracting and keeping the best employees on your team. 

Need more info on recruitment, onboarding and retention? Reach out to us at Hire Well Now today!

Jonathan Bergman

Jonathan Bergman

CEO of Hire Well Now, leads a team of dedicated, knowledgable and relentless recruiters and hiring experts that focus on Faster Hiring and Longer Retention for clients across the United States.

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