Retain Your Key Employees with Extra Incentives

Success is a broad topic that covers every element of business, so how do we apply it to remuneration? For Strategic Pay’s clients, we consider what success may look like in the HR arena and it ultimately comes down to maintaining and empowering organisations’ in-house talent.

Although the Reserve Bank is trying to slow growth and reduce inflation with increased interest rates, wage pressure on employers continues to rise. Employees are expecting remuneration increases to match their increased cost of living. They are in a strong position to negotiate (and they know it) because skill shortages are still a key driver in the marketplace and vacancies remain difficult to fill.

Losing key experienced and skilled employees has a massive impact on the deliverables and outcomes of any business. For your organisation to succeed in its strategies, mission and vision, you should ensure your skilled human capital remains to help drive prosperity.

Therefore, the most financially productive decision you can make as an employer will be to retain your skilled and valuable employees. The extra you pay now to keep your existing staff happy and loyal is significantly less than replacing key people who leave.  Recruitment and training costs are expensive, not to mention training your new starter to the same level as your previous employee. If you lose a salaried worker earning $60,000 a year, your company will likely spend $45,000 to replace them.

So how do you retain and empower your existing talent? A hot topic in remuneration is how to take care of your people and their wellbeing.  Providing flexible working options is one key consideration.

Our July 2023 Pulse Survey on Flexible Working indicated:

  • 69% of organisations report making or planning changes to their flexible working offerings
  • 53% increase in offering flexible working arrangements
  • 17% of flexible initiatives include working from abroad
  • 21% compensate employees for working from home costs

 

We are a multicultural country, and many people need to visit families overseas. If one of your workers needs longer leave what are your options? Contract the work out or absorb it within the remaining team? Or, if possible, can you offer the flexibility and tools for this person to work remotely? Investigate all available options to keep them if this worker is important within the organisation.

Less than 21% of organisations compensate working from home costs and a further 15% just provide internet. People want to work from home, however, with the cost of living do they want to pay for their own heating/air-conditioning and the peripheral costs normally covered in an office? It might actually be a quick fix to compensate them for these extras. Obviously, they save on travel costs and time, but wouldn’t it be lovely for them to have the best of both worlds?

Providing financial incentives to employees is great in theory, but harder to execute in reality. Businesses are still impacted by market fluctuations, political uncertainty and declining economic growth, so they must juggle affordability versus demand. Migration has also taken a toll with ever-changing entry requirements and long periods before the new employee can start. Our clients are also concerned about the recession, so they are not making quick decisions, especially around staffing.

But ultimately it is more cost-effective to retain and upskill your current employees than lose them and face talent shortages, recruitment issues and training processes. In addition to this high turnover levels can also reduce staff morale, lose customers and deter potential recruits.

The best thing for companies to do is to invest in employee satisfaction and engagement while they are employees. Taking action as early as possible helps lessen an employee’s dissatisfaction and lessens the likelihood of seeing a good employee go.  

Are your people happy with their remuneration, rewards and all the other ‘little’ things that generate employee satisfaction? Develop and nurture a happy workforce and this should result in success for your organisation.

 

Author:  Strategic Pay senior consultant Vineet Vinishma.  View profile here: https://www.strategicpay.co.nz/who-we-are/our-people/vineet-vinishma/ Contact: 0272856355 [email protected]

www.strategicpay.co.nz  

 

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