Do raises really give you the best return?
Pay increases aren’t necessarily a bad thing; they can often help with engagement and retention, and they’re sometimes necessarily to ensure you remain competitive in the market.
They aren’t, however, the only thing employees want. Recent research has indicated, in fact, salary isn’t the most important thing to employees.
A number of companies are moving away from relying primarily on annual increases to fuel their retention efforts. Korn Ferry’s 2017 global wage increase prediction showed a slight decline from the year before; WorldatWork’s 2018 pay increase forecast suggested we’ll see companies budgeting conservatively, due in part to international market volatility.
Your organization, too, may benefit from considering other compensation options—such as:
Generally given for special projects or one-time achievements, discretionary bonus use has risen slightly in recent years in the U.S, moving from 72 percent in 2015 to 75 percent last year. This year, while annual performance bonuses are expected to hold steady or decline slightly, discretionary bonuses are forecast to remain at the same level in 2018 as in 2017, according to Willis Tower Watson research.
One in five workers would prefer a promotion and higher title without a three percent raise instead of a 3 percent raise without a higher title, according to a BambooHR poll.
Training and other educational incentives
19 percent of employees said they valued employee development opportunities more than pay increases, according to a Glassdoor survey; 18 percent felt more strongly about tuition reimbursement.
It can be hard to hone in on what the one ideal incentive to offer employees in lieu of a wage increase might be — after all, motivations differ for different people.
Much of the research on what drives employees to succeed and stay with an organization supports the notion that a mix of elements — in essence, a positive work environment and overall experience — is the safest bet.
Take, for example, the survey of Australian workers that found loving your job had more of an affect on employee happiness than a number of other factors, including salary.
Workers who reported being very satisfied actually earned less than ones who said they were just satisfied.
For more thoughts on the various non-wage increase incentives you might offer in addition to title changes, training and bonuses, view our blog posts on creating the idea employee recognition program, competing with companies that offer big perks, what three things your employee recognition program needs and which employee satisfaction drivers you need to watch.