If you’re a business owner, you already know that your wage costs are your highest outgoing. So when somebody tells you that you should pay your staff even MORE, you think that they must be joking.
This, however, is no joke. There are, in fact, good reasons to pay your colleagues more than the industry average, some of which will outright surprise you. The bottom line is this: the more you pay people, the more you’re likely to get in return (often much more).
Great People Are In Short Supply
How many truly great people have you met in your life? The answer is probably a handful, if that. The majority of people are, by construction, average. People three or more standard deviations out along the high-end of the bell curve are nature’s exceptions – they don’t come along very often.
So, when you find one, you want to make sure that they stay. You might not want to hear this, but paying them above the industry average is one of the most powerful tools in your arsenal for staff retention. It’s more difficult for other companies to poach them, and hiring managers probably won’t want to offer them even more money since they don’t know them as well as you do. It’s too much of a risk paying big bucks when their quality is unknown.
You’ll Boost Productivity
Employee benefits schemes don’t just increase the perks of working with you; they also improve employee wellbeing. Higher employee wellbeing then translates into higher productivity, which, in turn, helps to improve your bottom line.
You Feel Better About Yourself
Let’s say that you have a star employee. You know that this particular colleague generates 80 percent of the profits of your entire sales team. You could continue to pay them the industry standard, but you know deep down in your heart that that isn’t right. This person is creating tremendous value for your business, and you should reward them for that. Paying about the industry average, therefore, is a great way to make you feel good about yourself. You turn yourself from a penny-pinching middle manager into somebody with a genuine vision for your organization.
You Give Your Employees More Reasons To Focus On Their Work
Low pay makes it difficult for employees to focus on their work. It’s hard to get up in the morning, go to work, put in a full day, and then get home and watch your living expenses wipe out your bank balance. It’s disheartening and can lead to money worries.
Paying your conscientious employees more gives them extra cash at the end of the month and helps them feel more financially secure. This added security will then feed into all their work, hopefully generating a higher quality output.
You Can Get One Employee To Do The Job Of Two
Highly talented and hard-working people are often able to do the job of two lesser individuals. Often, therefore, you can avoid the expense of taking on two people by more handsomely rewarding the great person you already have.