The high cost of low salaries: why paying a competitive salary is important

Wages may be classed as an operating expense, but like any good investment staff salaries can deliver healthy returns.

Your business may have a great product or service but the true strength of the firm lies with your people – and top talent deserves to be well remunerated.

Salary levels still pack considerable punch when it comes to attracting and retaining the best people. Quite simply, firms that do not offer competitive pay packets can put themselves out of contention when it comes to sourcing talents.

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Let’s take a look at how a smart salary policy can support your business.

Competitive salaries show you care

A carefully constructed salary policy shows you are committed to your team, and this in itself can be a tremendous incentive for staff. Your concern for the wellbeing of your employees filters through to morale and productivity, and will hopefully be reciprocated if the business finds itself facing tough times.

Low salaries are false economy

Successful retention of top talent should always be a core business goal.  In the 2017 Robert Half Salary Guide, 82 per cent of Australian Human Resources (HR) Directors said they are concerned about losing top performers to other companies in the coming year. And, 25 per cent of professionals indicated that higher remuneration elsewhere is a key reason for leaving a job.

It all points to the false economy of scrimping on salaries. When employees move on the impact on your organisation can be significant. Project timelines may suffer – costing the company additional time and resources to resolve.

Re-staffing comes with an additional cost burden. It’s estimated that when it comes to skilled and professional jobs, the tab for hiring and training a replacement, can be double the original employee’s salary.

These financial repercussions can be avoided simply by developing a competitive salary policy.

See your people as an asset – not an expense

It can help to view your employees as appreciating assets of the business. Sure, you’ll outlay costs initially but over time your team will bring knowledge, experience and loyalty to their acumen – qualities that will add value to your firm. The challenge for business leaders is to stay up to speed with current salaries – so do some research and use an industry benchmark or Salary Guide.

This article originally appeared as The high cost of low salaries: why paying a competitive salary is important on the Robert Half Australia blog.

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