Your employees are the backbone to your business. They handle all kinds of tasks, and if they do them well, it makes your job easier. To reward them, you may want to offer periodic pay raise.
1. Decide How Often to Offer Raises
How often should you offer raises? There is no right or wrong answer. Consider sitting down with your employees once a year to review their performances and decide how much of an increase you want to offer. Annual raises can increase your payroll costs all at once. If you prefer to deal with incremental changes, you may want to review your employees every quarter or six months and give them smaller raises. That also ensures that you sit down with your employees more frequently to talk about their work.
2. Keep Up With the Industry Standard
If you pay your employees generously and treat them well, they are more likely to stay with your company. Then, you can avoid the time-consuming and often expensive process of interviewing and training new employees. To ensure you’re offering competitive wages, find out what other small businesses in your industry are paying their employees, and try to keep pace. If the rates have gone up across the industry, you may need to raise wages. The Ministry of Labour and Employment tracks employment data, providing you with a useful place to start your research.
3. Choose Between a Percentage and a Set Amount
As you decide how much to raise your employees’ wages, consider choosing between a percentage and a set amount. Creating a consistent system from the beginning helps to make the process faster and easier. To explain, imagine you decide to use percentages, offering all your employees a 2%, 5%, or 10% raise annually. Then, you meet with all your employees once a year on the anniversary of their hiring date, and based on their performance, you give them a raise that corresponds with one of these rates.
Alternatively, you may want to offer your employees a set amount of money every year. For instance, let’s say you pay new employees ₹50,000 per year. You may decide to offer them a raise of ₹2,500 or ₹5,000 every year. When you choose a set amount, you don’t have to think as hard about the process.
4. It’s Not Always About Cash
When thinking about raises, remember that cash isn’t the only option. You may want to offer your employees extra benefits. According to one survey, 70% of Indian businesses offer employee benefits. If you want to attract the best and brightest, you may also want to offer a benefits package. Some of the most popular benefits include childcare, elder care, and health and wellness benefits. Your employees may appreciate a mixture of benefits and cash when it’s time for a raise.
5. Consider Implementing Bonuses
If you’re worried that you can’t afford to increase your employees’ pay, you may want to implement a bonus scheme. You can tie bonuses to sales or performance, which helps to make the situation more risk-free for you. You could offer your employee a set bonus for hitting certain sales milestones. Alternatively, you may want to offer employees a certain percentage or even a fraction of a percentage of your profits.
Once you’ve made a plan, consider investing in a payroll app that syncs with your accounting software. For instance, T sheets time tracking syncs with QuickBooks, helping you to track hours, wages, raises, and more.