There’s a problem every manager will face at some point in his or her career, and it has everything to do with money: an employee deserves a raise but you simply can’t afford it.
While a salary increase is never a guarantee, there is a certain expectation for at least a small bump in pay each year. And if you’re unable to offer salary increases this year — be from a tight budget or some unmet quota — understand that you’ll risk losing strong performers without some sort of acknowledgement of their contributions.
But there are always incremental alternatives to the traditional raise that can be just as beneficial to keeping employees from walking out the door. In fact, 89 percent of employees between the ages of 18 and 34 would prefer benefits and perks to pay raises.
The next time your business is strapped for cash, consider these alternatives:
1. Performance bonus.
If a raise isn’t in the budget, a one-time performance bonus could be enough of an incentive to maintain employee morale, satisfaction, and engagement until you can offer an actual salary bump.
2. Flexible schedule.
A perk employees value most is flexibility — even more so than pay. In fact, 88 percent of people would more heavily consider a job if the employer offered flexible hours. In lieu of a raise, consider giving staff more flexibility in their schedules.
3. Work from home.
As far as perks go, second to flexibility is often telecommuting, with 80 percent of people saying they’d consider a job if the employer offered the option to work from home. Give employees the opportunity to telecommute one or two days a week — it’ll save on their transportation costs, which is basically money in their pockets.
4. Time off.
Extending the time-off policies by a few days is another viable option. Staff obviously benefits from the additional leisure time, while your business gains one particular advantage: Employees return to work even more reenergized, which can result in engagement and productivity gains.
5. Unlimited vacation.
Did you know that two-thirds of people would consider taking a lower-paying job if it came with unlimited vacation? Not only could this serve as a sign that you trust your employees to manage their own workloads but the policy could convince people to forgo salary increases for the year.
6. Mentorship program.
Sixty-three percent of Millennials feel their leadership skills aren’t being developed — at least according to a recent Deloitte Millennial Survey. They’re also 68 percent more likely to stay at an organization for more than five years when working with a mentor. Consider adding this perk in place of a bump in pay.
7. Tuition reimbursement.
Establishing a tuition reimbursement program has a monetary value for many employees, and it also demonstrates that — even though you can’t offer a raise — you’re invested in their professional development and future.
Depending on your industry, your employees may be eligible or eager to participate in a professional organization. It might not be much, but you could always offer to pay for the dues associated with their participation.
9. Personal perk.
Smaller organizations may want to sit down one-on-one with employees to explain the situation and come up with an individualized solution to no annual raise. One person may want additional time off, while another may take a membership to a gym or professional organization.
Skipping those annual raises should never be about saving a few dollars. Remember, turnover can be very costly. Sometimes, you’ll spend upwards of 150 percent of someone’s salary just to replace that person. If you can swing it, offer the raise — if not, then consider an alternative.
If you’d like more advice or insights for improving your business or building a stronger workforce, please feel free to contact the team at Staffmark today. We’d be more than happy to discuss your needs and help you determine what resources are necessary to make a real difference for your company’s future.