Are you on the right track to retain your high performing employees? It’s a challenge starkly summed up by the headline of an article published by Forbes last year: Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less.
The statistic refers to a lifetime of remuneration, but the more immediate figures are no less alarming. With most employees receiving salary increases in the vicinity of 3% last year – or closer to 1% in real terms once adjusted for CPI – the average pay rise achieved by an employee in moving to a new job is 10-20%.
The choice for employers, therefore, is soberingly clear: create a supportive and rewarding work environment and pay a competitive salary or face the inevitable loss of key staff.
In our last Salary and Benefits Survey (2014), we confirmed that Australian salary movements hovered at around 3.3% – just above inflation. But that trend varied depending on organisational size. Large organisations (turnover in excess of $501m) applied lower salary increases (2.7%) than organisations with lower turnovers. And at the other end of the scale, small organisations (turnover up to $5m) provided the highest salary increases during 2013-14 (4.6%).
On first glance, it’s a result that appears counter-intuitive. But what it suggests is that smaller businesses tend to be more agile and ready to compete when it comes to retaining key staff.
It’s an approach with a solid business case. Recent industry studies have consistently estimated the costs of replacing an employee at between 75% and 150% of the employee’s salary – the higher the employee’s level, the higher the cost tends to be.
Placing this is the context of retention costs, it would seem that it could pay to look closely at how your remuneration strategy compares to your competitors. Paying a little bit more in salary could end up saving you a lot of money.
Successful organisations develop a remuneration strategy that best fits their objectives and values – and one that is built upon a solid understanding of the job markets they are operating in. These adopted strategies are vital in shaping an employee’s commitment, loyalty, performance and how they view your organisation. A good one might just be worth sticking around for.
If you’re interested in building a competitive remuneration strategy, why not participate in our Salary and Benefits Survey for 2015? By participating you can get access to individual salary data sheets that allow you to benchmark job positions and market salary rates and be sure that you are comparing similar roles – and you could save up to $1350 off the purchase price of the report.
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