What’s It Worth to Your Employees

“I’ve been considering a raise for my employees. When I look at the cost of living percentages, it seems that a small raise won’t be considered the reward I’d like it to be. What are my other options?”

Your HR Survival Tip

It’s true that cost of living increases have been quite small over the past few years. In some cases, all it does is throw your employee into a higher tax bracket and they end up with less net pay.

A survey by BambooHR, an HR software firm, shows some interesting results regarding employee preferences:

• 33% surveyed preferred a $2,000+ bonus rather than companywide recognition of their good work, but 6.6% surveyed felt this trade-off was worth at least $5,000; and
• 20% surveyed preferred a promotion to a higher title without a 3% raise rather than a 3% raise without the higher title, but 68% of that 20% would need at least a 10% raise to ignore the higher title.

Another survey of 200,000 employees, by Boston Consulting Group, looked at on-the-job happiness factors. The following are in order of importance to those polled:

• Appreciation for the employee’s work … yes, you’re paying them but they still like their work to be noticed;
• Good relationships with their coworkers … often those relationship are also great for retention;
• A good work-life balance … you’ve heard about it for years but more employees are demanding it;
• Good relationships with their supervisors and management team … you don’t have to be best friends but some friendliness is always appreciated;
• The company’s financial stability … employees are slowly getting over the effect the recession had on their careers but they aren’t looking to repeat it;
• Opportunities for learning and career development … while many companies feel this is just helping the employee get another job, it’s really proven to be great for retention and your company can usually benefit from what the employee has learned;
• Job security … another bad memory from the recession;
• An attractive fixed salary (this usually means base salary rather than total comp) … while a bonus or commission is great, it’s not guaranteed and hard to rely on;
• Interesting parts to their job … we all want to look forward to our job rather than a day of boredom so make sure you have the right person in the job; and
• The company’s values … more and more employees want to work for companies that share their values.

While employees love bonuses, the money is always at least halfway down on these lists. You should ask what your employees would most appreciate. It may cost you less and provide better results.