Giving raises and high-quality benefits packages to workers can get expensive. Every executive knows this. Many corporations have locked into annual raises of 1 or 2 percent to save a buck. Others have cut corners by forcing employees onto high-deductible insurance plans, reducing company contributions to retirement accounts, or cancelling profit-sharing and bonuses.
But here’s the thing. Employees really do notice all of those maneuvers. They talk about them in the break room, through instant messages, and during after-work drinks. The more dissatisfied your employees get, the less productive they will be. If their hard work goes unrecognized long enough, many will take the skills they’ve developed, jump ship, and seek new employment somewhere else (often a competitor) that offers better pay and benefits. This trend has come to be called “job-hopping,” and has become a common way for employees to advance in their careers and obtain recognition.
“A pay increase is the right thing to do. Wages for many Americans have gone nowhere for too long,” wrote Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., in the op-ed “Why We’re Giving Our Employees a Raise,” published in The New York Times earlier in July. The piece detailed the financial institution’s plan to raise its internal corporate minimum wage from the current $10.15 per hour.
“Over the next three years, we will raise the minimum pay for 18,000 employees to between $12 and $16.50 an hour for full-time, part-time, and new employees, depending on geographic and market factors,” Dimon wrote.
The Impending Federal Wage Hike
While this move may or may not have been driven by conscience, Dimon’s announcement comes in advance of a $12-$15 proposed federal minimum wage increase that’s gaining traction in the American political landscape. Many American states and cities have already implemented higher minimum wages on local levels. Companies that get ahead of the federal increase will be in a much better position to meet new federal minimum wage requirements when they do come along, as opposed to companies that wait and are forced to suddenly give out large raises.
One of the biggest fears for many businesses is that a federal minimum wage hike will bring new expenses they can’t afford. One of the best ways to prepare would be to follow Jamie Dimon’s example and put a plan in place now that gives incremental raises over several years. That will allow businesses some time to adjust to the cost. While most proposed federal wage legislation also lays out incremental wage hikes, companies that start sooner will have more time to figure out how to work the increased expenses into their operating costs.
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The Benefits of Benefits
Though higher pay and regular raises will certainly help to attract and retain employees, it’s not the only factor people consider when deciding to take or stay at a job. Workers also want comprehensive benefits packages to round out their salaries.
“While a higher wage is important, so are benefits. Our lower-compensated employees receive a medical plan — subsidized up to 90 percent by the company — as well as dental, vision, and other coverage,” Dimon wrote. He goes on to detail pension, vacation, and bonus plans that average $11,000 per year for his employees.
Obviously, smaller companies can’t be expected to match the resources of JPMorgan Chase and just drop 11 grand on every employee’s benefits package, but finding tangible ways to reward employees for loyalty and hard work goes a long way toward ensuring their continued dedication. When employees feel valued and appreciated, they give back to the company in the form of harder work.
However, it’s not just about getting employees to give more on a conscious level. There are fringe benefits, too. Good health plans ensure employees are getting regular check-ups and that their quality of health is better, so they call in sick less often. Other plans like life insurance and retirement help employees focus on the job, because they know their futures and families are safe and secure.
If managers feel they are already giving out valuable benefits packages and employees aren’t responding in a positive way, there are a couple of things to be done. First, survey employees and see which benefits are most important. It’s possible that the company is giving out benefits their employees don’t even want or need. Once that’s done, make sure employees know how much their benefits package is worth. If they think they don’t make enough money, but don’t realize the company is paying thousands extra each year for their benefits, that could be a cause for their feelings of underappreciation.