Historically, the combination of low unemployment with high inflation has contributed to many employees demanding significant salary increases. In a high inflation environment controlling wages becomes crucial to maintaining financial stability and competitiveness. This article explores strategies that businesses can employ to navigate wage control effectively, while ensuring employee satisfaction and business sustainability.
Adopt a Remuneration Strategy
Developing a well-defined and sustainable remuneration strategy is essential in controlling wages. Conduct a thorough review of your competitors to determine market trends and industry standards. Determine the financial capabilities of your business to provide salary increases. Consider implementing variable pay structures that link compensation to performance, productivity, and profitability.
Prioritise Employee Benefits
Salaries are not the only thing that employees focus on when deciding on an employer. Intangibles such as lifestyle needs and workplace culture are critical for employees. Consider offering flexible working arrangements such as work-from-home and nine-day fortnights (while still working 75 hours per fortnight). Keep the culture of the business strong and provide extra benefits to staff – provide lunch once a fortnight, offer in-house massages every month, take all the employees out to drinks every three months, supply fruit for the office every week. While there are costs to these benefits, they are lower than the cost of wage increases. Employees will feel like they are valued and part of a business with a great culture.
Embrace Training and Development
Investing in employee training and development will provide opportunities for growth for your employees. Enhance skill-building programs and create a culture of continuous learning. When employees feel valued and are able to continually improve, they are more likely to remain committed and engaged, even without significant wage increases.
Consider Performance-Based Bonuses
To keep employees motivated, consider implementing performance-based bonuses. Tie bonuses to individual and team achievements, such as meeting targets, exceeding expectations, or driving innovation. Targets must be achievable and realistic. This approach ensures that wage increases are directly linked to employee contributions and business performance. If the business performs well, the employee is rewarded.
Be Transparent
When communicating with employees about salaries, be transparent and open. Employees need to understand about the economic challenges the business faces and how wages need to be controlled. Explain the remuneration strategy and the various factors influencing salary decisions. Encourage feedback from employees and address any concerns they may have. By involving employees in the wages conversation, they will feel like they are part of the business and have a sense of shared responsibility for its success.
With a new financial year approaching, wage reviews are just around the corner for many employers. The above strategies will allow you to provide a balance between providing wage rises, managing costs and keeping your employees motivated and engaged.
If you need any assistance in controlling your wages in the current environment, please don’t hesitate to contact your Accru advisor, who will be happy to support your business needs and work with you to find the best solutions.
