By reducing employee turnover, your company can save money in the long run and focus on the tasks that will help it grow and become productive. A key way to increase employee retention is by making sure you hire the right people from the beginning. When you hire professionals with relevant skills – and find personalities that match your company culture – you automatically reduce the likelihood of turnover. But what about a year or two down the line?
Once you have fostered an employee and they’ve gained new skills, the risk that they will leave the company for better opportunities elsewhere grows. It stands to reason that, since they have more marketable skills, the competition could be looking to poach those employees from you by offering a pay bump or better benefits. The question then becomes, “How to do you reduce turnover several years into the employee’s tenure at your company?” The two most common answers are promotion or pay raise. Keep reading to learn how to determine which is the best option:
According to a recent study by The Society for Human Resource Management, 63 percent of professionals would rather get a promotion with no pay increase than a pay bump without a promotion. Why? The answer seems to be about job satisfaction. With a promotion, employees expect to have more responsibilities, more freedom and more future opportunities. The survey also revealed that most respondents believe that a promotion is warranted every two to three years.
The question, then, is how do you decide who to promote? Obviously you cannot promote every single employee within your organization. The Muse suggested starting with hard facts and figures. Determine which metrics you want to use to compare workers, then determine which stand out from the crowd. Beyond facts, however, you should also pay close attention to qualities that are harder to quantify, such as work ethic and how well they respond to criticism and feedback.
Employees may expect a promotion every two to three years.
There are several reasons to give an employees a pay raise. After working for your business for some time, their skills and experience will have increased and thus they may deserve more compensation for their efforts. Likewise, you may not have the room available for promotions and a pay raise sends a clear signal that you value their work.
When considering an employee for a pay raise, Salary.com suggested looking for positive qualities such as attitude, confidence and team loyalty. These may be soft skills, but they are extremely important to the overall success of your company. Chances are you already recognize success in the technical skills that affect daily tasks and productivity. Looking at hard and soft skills will give you a complete picture of the employees you’re considering for a raise.
Whether you decide to use pay raises, promotions or a combination of the two is ultimately up to you and the specific situation within your company. Paying careful attention to employee work habits will help you determine when and how to reward your employees.