Manage pay expectations

Keep pay expectations realistic

Rising energy and materials costs combined with falling sales have left many businesses unable to make the annual inflationary pay rise - even though employees' living costs are increasing

Here is some advice on how to keep pay expectations realistic without affecting morale and motivation.

How do you determine whether or not you can afford to give pay rises?

You shouldn't be making pay awards that might mean having to make cuts in the future. Benchmark yourself against competitors, as you may find you're already paying more than the going rate. Be selective about pay awards, spending money where it is most needed. Identify who your key staff are, and where you can't afford to lose people.

How do you tell employees that they may not be receiving a pay rise?

Be open with people. Give your reasons and communicate them well throughout the company. Many businesses nowadays share performance and profit information, and it should be the same with bad news.

How can you keep morale and performance levels up?

If your hold on pay rises is temporary, let staff know that you will review the situation in three or six months. Keep updating people too, so they can gauge for themselves how the business is faring. Non-monetary rewards are also very important and sometimes a pat on the back is highly appreciated. Why not organise a team day out or an employee of the month scheme to let everyone know their efforts are valued.

What other low-cost benefits can you offer employees to boost motivation?

One idea is to negotiate with local businesses, such as hotels, gyms or spas, for discounts or a special rate. You could provide fresh fruit every day for everybody, which is a low-cost way to tell staff that their well-being is important.

Another option is to look at flexible-working arrangements. Research shows this is one of the most popular benefits for employees and it can be an effective way to set yourself apart from competitors.

Similarly, if you currently offer staff certain benefits, why not give people a benefit statement, covering things like pension contributions, holidays or health care. Sometimes people don't realise what they're getting from employers, and this could also be a good retention factor.

Should you introduce a profit-share or incentive pay scheme?

If you can't afford to give staff a decent pay rise, it's unlikely that a profit share would be sufficient to motivate people, so that probably isn't the route to take.

Incentive pay, on the other hand, can be an effective way of sharing a pay rise pot among certain individuals. If you do this, it must be done in a non-divisive way, though. Make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between staff.

For more information about pay expectations contact a Business Link Customer Service Adviser by telephoning 0845 058 6644 or request a call back at your convenience.

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