For many companies, personnel-related costs are one of their biggest line items. Covering employee wages takes up a substantial amount of the budget, so the idea of raising them might seem impractical. But, by increasing pay rates, you can actually capture a cost-savings that offset the higher wage spend. If you are wondering how that’s possible, here’s what you need to know.
Retention, Recruitment, and Training
While money isn’t usually everything, you can’t say that it isn’t something. Many employees leave jobs in search of higher compensation even if they are otherwise satisfied with their roles; it’s that simple.
By increasing wages, you are reducing that source of motivation. By staying ahead of the competition when it comes to pay, looking for opportunities elsewhere becomes less enticing.
As a result, you won’t have to spend as much refilling positions. Additionally, since you’re more likely to be viewed as an employer of choice, your recruitment goals may be easier to achieve. Overall, this allows you to save a significant amount in the hiring arena alone.
Plus, you won’t have to dedicate funds to training as many new hires. Your tenured workers will keep their expertise on board. Additionally, they may be better equipped to assist incoming employees with getting up to speed, resulting in new hires reaching full productivity faster.
Engagement and Productivity
When your employees feel that they are being compensated fairly, engagement tends to rise. Further, increased wages can reduce financial stress, making your workers happier overall.
Typically, this leads to significant productivity boosts. As a result, your teams may be able to accomplish more in less time, or you can achieve your production goals with fewer employees. In either case, you gain financially. It’s also possible that you could reduce (or even eliminate) the need for overtime. As a result, your profits may rise, your personnel costs may fall, or both.
Absenteeism and Disciplinary Action
Often, when wages go up, absenteeism and the need for disciplinary action declines. Partially, this is due to the increased level of job satisfaction many of your employees will feel. Their level of loyalty may rise and they may feel less stress when their pay levels rise. This can lead to morale increases and mood improvements, reducing the likelihood that an employee will call in without just cause or fail to meet expectations. In the end, your workforce will be more present, conscientious, and committed, making them more capable and ensuring productivity remains high.
Ultimately, wage increases can save you money overall. If you’d like to learn more about the impact of pay raises on your workforce, the staff at Apogee Managed Solutions can help. Contact us today and see how our compensation expertise can benefit you.