Deciding how much to pay employees and increase pay by can be troublesome, in this article I look at the issues and options available to companies when reviewing salaries and benefits to retain and recruit their workforce.
Between 2023 and 2024, UK employers have budgeted an average pay increase of 4.4%, down from the 5.1% increase in 2023[1].
This adjustment reflects a more conservative approach as businesses aim for long-term stability. For example, the finance and business services sector saw a 6.7% increase, while the construction sector had a 3.0% increase[2].
What is a fair salary for a specific job role and how do I find this out?
To determine a fair salary, you can use industry benchmarks and salary surveys. Websites like Glassdoor, Payscale, and the Office for National Statistics provide valuable data. For example, the average weekly earnings in the UK for May 2024 were £689 for total earnings and £643 for regular earnings[3].
What is the minimum pay that I must provide?
As of April 2024, the National Living Wage for workers aged 21 and over is £11.44 per hour[4]. For younger workers and apprentices, the rates are lower:
18-20 years old: £8.60 per hour
Under 18: £6.40 per hour
Apprentices: £6.40 per hour[5]
What other benefits can I provide to increase employee satisfaction?
Healthcare and Wellness Programs: Offering private health insurance or wellness initiatives can significantly boost employee satisfaction[6]
Profit Sharing or Stock Options: These can align employee interests with company performance and foster a sense of ownership[7]
Increased Time Off: Additional vacation days or a four-day workweek can improve work-life balance[8]
Remote Work Options: Allowing employees to work from home can reduce commuting stress and increase flexibility[9]
What if I cannot afford to pay more?
Decreased Employee Morale: Employees may feel undervalued, leading to decreased motivation and productivity
Higher Turnover Rates: Employees might leave for better-paying opportunities, increasing recruitment and training costs
Viable Alternatives to Pay Increases:
Flexible Working Arrangements: Offering remote work or flexible hours can improve work-life balance and job satisfaction[10]
Enhanced Benefits: Providing benefits like healthcare, wellness programs, or additional paid time off can be cost-effective and highly valued by employees[11]
Professional Development: Investing in training and career development opportunities can enhance employee loyalty and performance[12]
What examples exist of companies that have provided increased benefits and how did it improve retention?
Mercer: By enhancing their benefits package to include more comprehensive healthcare and flexible working options, Mercer saw improved employee retention and satisfaction[13].
Stribe: Implementing flexible working hours and enhanced health benefits led to higher employee engagement and lower turnover rates.
Is there anything else small companies should consider?
Small companies should also focus on creating a positive workplace culture, recognising, and rewarding employee achievements, and ensuring transparent communication.
These practices can significantly enhance employee satisfaction and retention without necessarily increasing pay[14].
If you would you like more detailed information on any of these points and would like to review your pay structure, then get in touch today!
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