Offering High Salaries Makes Business “Cents”
Everyone wants to hire the MOST savvy, MOST experienced, MOST confident candidate for the job. But some companies try to get all of that MOST for the very LEAST in salary. In many cases, offering high salaries makes sense.
Does it make good business sense to offer new hires top salary dollars, or is it better to start off in the bottom of desired compensation ranges?
As an experienced recruiter, I firmly believe offering top dollar to capture desired talent pays off. Here are four reasons why:
Reason #1: Great Talent is Limited
It may seem like there is an endless pool of candidates, but be wary– there is a limit to great talent. Limits can include experience levels, specialization, willingness to relocate, and timing. Positions which are more and more specialized (think proven sales hunters, product, and technology talent), have smaller candidate pools at any given time. Also, is the timing right for a candidate to begin when a position is open and available?
If a company finds a candidate with the right combination of great talent and great timing, an attractive salary can ensure a candidate accepts the offer.
Reason #2: Company Reputation
A company itself becomes a sought place to work if it has a reputation for paying high salaries. This reputation helps attract a larger number of qualified candidates. When a new hire is chosen, he/she is more likely to feel that the sought-after position is one to keep long term. This enthusiasm translates to better job performance. A company may even need fewer employees to accomplish the same tasks.
Reason #3: Employee Morale and Retention
Although the best things in life are free, a higher salary can alleviate sources of stress for employees. John Boltnott of Inc.com says, “Salary helps sustain an employee’s personal life and drives many of their choices outside of work.” Things like childcare costs, student loans, or home repairs are not quite the same sources of stress. Employees will be able to better fund vacations or other means of self-care. Higher salaries can lead to better morale among the workforce as a whole.
Paying higher salaries also increases employee retention because employees will not always be looking for the next opportunity to get into a desired compensation range. The “one foot out the door” attitude takes away time and focus.
Reason #4: High Cost of Employee Turnover
Paying higher salaries can reduce costly employee turnover. This includes human resource dollars, hiring manager time, recruiting costs, training costs, and costs stemming from decreased productivity as a new hire gets up to speed. If new hires are compensated well from the start, they are more likely to stay in a position long term, leading to a better return on investment for the company.
The Amazon Example
Amazon recently decided to voluntarily increase its minimum hourly wage to $15 per hour. As the online shopping giant grew, the pay of its workers became a political issue. Critics cited Jeff Bezos’s personal wealth of $165 billion as being in stark contrast to many workers using federal benefits. Amazon decided to take the bold step of raising its minimum wage across the board.
Reducing salary disparity among top executives and other workers can certainly become an issue, especially when employees earn lower than market value in salary.
Choosing to offer employees a higher salary is sometimes not an easy decision for companies. But, it’s one that pays off when the many benefits are considered. Offering higher salaries makes business “cents.”
For employees, “raising” the conversation of money is never easy. There are several considerations that can help you leverage your skills and value when asking for a raise.
At Artemis Consultants, we like to think of employees as the best investments companies can make– as “appreciating assets.” Please visit our website for more information on our services.