If as a business owner, you’re desperate to find new employees to fill important roles within your company, you might well make the decision to raise new hire pay. However, while this is an understandable action to take, it’s wise to note that it can come at a price.
Your existing employees will likely not be blind to the fact that you’ve increased starting wages or salaries for new hires, and when they discover this, there’s a strong possibility that they’ll ask for more money to address any perceived discrepancies. Failing that, they may decide to quit in the belief that they can make more money elsewhere, or leave simply because they feel under valued and disgruntled. However, without a compensation budget to support addressing every pay discrepancy, but still with a very clear need to pay more to attract new hires, what can companies do to avoid getting caught up in a vicious cycle of employee conflict and understaffing?
If you need to raise new hire pay in order to attract the best talent and fill essential roles, what can you do to mitigate conflict among existing employees and avoid major discrepancies in pay? Here are 3 strategies you may find helpful:
- Reward permanent employees in other ways
If awarding higher pay to existing employees to bring them up to new hire levels isn’t an option, you can always try rewarding them with promotional incentives, or discounted stock options, for example, and give them other valuable reasons to remain within your employ.
- Ensure that pay decisions are backed up with data
If you can show your existing employees the data behind your decision to offer more money to new hires, they may be less likely to quit and search for a higher paid position elsewhere. With rationale backed by strong data, such as performance numbers, a variance in certifications and skills, or the cost of living, for example, you may be able to persuade them to stay, and not demand an increase in pay.
- Wait for new hire pay to settle down
There may well come a time when companies are forced to cut back on hiring, and new hire pay will inevitably settle back down to a more manageable level as a result. Existing employees will also find it harder to seek out better compensation elsewhere, and negotiations over pay could quickly tip back in your company’s favor. If you can be patient, you could be rewarded.
Raising new hire pay is a difficult decision to make, but for many businesses struggling to stay afloat and meet consumer demand in an increasingly competitive environment, it can seem like the only option. Be sure to consider those points mentioned above should you decide to offer new hires more pay than existing employees, and review the 3 strategies to ensure that your decision is the best one for the future of your business.