As we have discussed previously, employee retention is a top priority for HR departments. While compensation is one way to reward employees and provide them with an incentive to stay with the company, pay increases are still lagging.
According to a recent Forbes article, staying at a company for longer than two years could result in being paid 50 percent less over the course of your lifetime. We recently discussed how a fair salary serves as an indicator to employees that they are valued for their contribution to an organization.
So why aren’t more employers rewarding employees with raises?
As Forbes details, when factoring for inflation, the average raise received by employees this year is less than one percent. A rate like this may cause employees to search for a new job where they will receive better compensation. The article goes on to explain that the reason behind this trend initially began with the recession, but is now considered to be normal.
Some employees have found that switching jobs is a way to increase their salary. One marketing manager increased her salary by 430 percent over a ten year period by switching jobs five times.
Switching jobs may work for employees seeking out better salaries, but for HR departments looking to attract and retain talent, this trend could be an issue. However, Forbes contributor Cameron Keng notes that companies spend a lot of money vetting and training candidates, when they could “just hire better people and pay them more.”
This point may be worth noting for HR departments looking to build up their talent assets and reduce turnover. HR software solutions can help departments organize the essential details necessary to determine how to fairly compensate employees.