As a small business owner, you want to show your employees you value their services by providing a healthy paycheck. But given the expense and unpredictability of running a small business, we know it can be tempting to try keeping your payroll costs as low as possible.
You might want to resist that temptation. A 2019 survey commissioned by QuickBooks Payroll and conducted by Kelton Global finds that paying a competitive rate makes really good business sense. In fact, the survey reveals there’s a direct correlation between your workers’ pay and their long-term loyalty to you and your business (more on this below).
The good news is that the paycheck challenge is an opportunity for you to figure out how to offer wages that help you attract, hire, and retain top-notch workers. Let’s dig into some of the survey findings to better understand both the problems and the possibilities surrounding the almighty paycheck.
First, the challenges
The following statistics shed light on how current and prospective small business employees think about their wages:
67% say salary is a critical factor in deciding whether or not to accept a job offer
It probably won’t surprise you that salary is one of the most important things prospective employees consider before saying yes to a new role. For over 2 in 5 workers, it’s the #1 factor driving their decision. Junior-level workers are more likely than high-level hires to turn down an offer they deem too low (49% vs. 35%).
Food for thought: Hoping you can make a lowball offer and still land the perfect candidate? To avoid hearing, “Thanks, but no thanks,” you might want to think again.
65% of workers think they could make more money elsewhere
Many do more than just dream about higher wages. Of the folks who pounded the pavement looking for a new position in the past year, 43% were confident they could earn more at a different company. And 35% of workers who embark on a job search are on a quest for better compensation (which can mean pay + benefits).
Food for thought: Cold hard cash is much more motivating than perks like a title change (16%), more autonomy at work (12%), or job security ahead of a future recession (11%).
47% would turn down a job offer if the salary isn’t competitive
You should expect about 70% of candidates for mid-level or associate positions to prioritize salary when weighing an offer. More than half (55%) of president/C-suite applicants keep salary top of mind.
Food for thought: Discerning job candidates will know exactly what the competition is offering, so do your homework. Once you understand what the comparable wages are in your industry, you’re more likely to be able to match them (or even do better).
Now, the opportunities
The following findings may help you identify, hire, and keep all the awesome employees you want (and need).
65% say earning a competitive salary makes them more loyal to their employer
Moolah really does matter. Building loyalty isn’t just about salary, either, with 54% of workers saying they feel more warm and fuzzy about their employer when they get an annual raise. Turns out men are more likely than women to say a competitive salary boosts loyalty (69% vs. 61%). More women than men pledge allegiance to a company when the culture rocks (60% vs. 46%).
Food for thought: Other ways you can boost employee loyalty? Create a positive company culture (58%) and promote your people when they deserve it (54%).
80% of small business employees weigh the whole package—salary and benefits—when considering a job offer
Most folks are willing to embrace big-picture thinking when it comes to compensation.A whopping 87% of small business workers would opt for other benefits over a 5% raise. Younger workers are more likely than older employees to say yes to better benefits over a 5% pay bump (91% vs. 85%). (Discover how great benefits can meet workers’ emotional needs.)
Food for thought: If your paycheck can’t compete, sweeten your workers’ deal with benefits like flexible work schedules, better healthcare coverage, and PTO. (You can read more about our findings related to employee benefits here.)
55% feel comfortable asking their boss for a pay raise
If an employee asks for higher wages, it pays (literally) for you to listen. Workers who got a pay hike in the last year were less likely than those who didn’t to think they could earn more elsewhere (62% vs. 69%). Notably, 48% of small business employees say they’d stay at their current job if their employee matched a higher offer from somewhere else. Associate- (48%) or mid-level (51%) hires are more likely than president/C-suite workers (37%) to accept a salary match at their current job.
Food for thought: It’s a feather in your business cap if someone asks for a raise rather than simply quitting to take a higher offer. Seize the moment to communicate openly—and, perhaps, reach a compromise.
As a small business owner, you already know that what you pay your workers helps you attract and keep top talent. (We haven’t even mentioned the incalculable value of having happy employees who tell everyone how much they love working for you.) The recent survey highlights the importance of fair compensation, not just for the sake of your employees, but for the sake of your business.
If you’re seeking to build a reliable, motivated, and loyal team, do your best to offer competitive pay, give annual raises, include meaningful benefits, and, if a worker asks for higher wages, be sure to listen.