When is the last time you raised entry level pay rates? Don’t guess. Look it up. If you haven’t adjusted pay rates in the last three years, chances are you are not keeping up with your competition. As a result, you are most likely experiencing excessive turnover which in turn has lead to increased training costs, habitual hiring demands and possibly even quality issues for your customers.
If you haven’t raised pay rates since as long back as anyone at your company can remember, then we can easily explain your revolving door of new starts and your lack of experienced workers. You simply aren’t paying enough to attract qualified top talent to your door.
Who will hire top talent if you can’t afford them?
You are competing with other companies – not only in your industry, but in your neighborhood- for top talent. When it comes to entry level workers, every dollar counts. And yes, that dollar can make a huge difference to your bottom line. But not in the way you may be thinking. You know who you are competing with when it comes to the entry level workforce. It’s your competition. It’s that factory in the same industrial park as you. Every company we meet with is able to quickly name several companies they know they compete with for top talent. Have you investigated what they are paying their workers?
After years of cost-cutting initiatives, “Don’t act like you’re broke” is a motto many top companies are adopting. They are learning what consumers have known for years: you get what you pay for. By all means, turn the lights off when you’re not in the room. This is an obvious way to save on costs, but cutting pay rates or failing to increase them when you should is not a winning strategy.
Benefits vs. Salary
Don’t think for a second that your benefits package makes a difference for entry level workers. Yes, benefits will attract highly-paid salary workers. In fact, they often will overthink these types of details in lieu of actual salary, which is what makes benefits such an important concern to begin with. It’s often the difference between a strong management team and a weak one.
[perfectpullquote align=”full” cite=”” link=”” color=”” class=”” size=””]However, when it comes to entry level hourly workers, I’ll give you a news flash: They grossly undervalue the benefit of benefits. And who can blame them?[/perfectpullquote]
They’re worried about how they’re going to pay the rent this month. Yes, they think often of what they will do if someone in their family gets sick or injured, but it’s all a matter of priorities. Their main concern is knowing how much money they’re going to get on their next paycheck so they can buy groceries. And yes, they will leave their current job for a nominal increase in pay, sometimes as little as 25 or 50 cents an hour. Your offers of a growth opportunity and a 401K match are usually falling on deaf ears.
They’re worried about how they’re going to pay the rent this month. Yes, they think often of what they will do if someone in their family gets sick or injured, but it’s all a matter of priorities. Their main concern is knowing how much money they’re going to get on their next paycheck so they can buy groceries. And yes, they will leave their current job for a nominal increase in pay, sometimes as little as 25 or 50 cents an hour. Your offers of a growth opportunity and a 401K match are usually falling on deaf ears.
Front load your wages for entry level workers. And as for quarterly bonuses? Forget about it. Most don’t care! They’d rather have the money now
Do your research or ask a partner to do it for you
As you evaluate your pay scale, the resources you can rely on are ample. Most staffing partners can provide these types of analytics based on their own client base and through their partnerships with companies like CareerBuilder and Monster, who they spend a lot of money with. In return, these companies offer full databases of pay details by industry, region and type of work. Ask them for this information. They will jump at the opportunity to educate you, especially if there is a chance they can do business with you. They also know that the higher your pay rate, the easier it is for them to send top talent your way.
Finally, compare your pay rates to the local fast food joints. Chances are, you are producing a unique quality product. Shouldn’t this job pay more than it pays to drop French-fries into a fryer? Walmart even raised pay rates last year. Isn’t your work more demanding than that?
Where is your next employee right now?
Your next great employee is probably not unemployed today. They are working somewhere and they are exceeding expectations for one of your competitors. If you can offer them a little bit more, along with a pleasant work environment and good people to surround themselves with, they will gladly come and work for you instead.
Eleven is the new 10. Nine is the new 7. Twelve is the new 11. However you look at it, what you had to pay yesterday is not what you need to pay today to attract the top talent your company needs to ship quality product on time. How can you afford not to pay what the entry level worker needs? Your client might even be willing to pay more for the better service and more consistent delivery of their quality products. I know you would.
