Money is not the only motivator for better performance at a job, but factors in heavily. Employee salaries are very important business decision to be made by the top management, depending on current/ future incomes, opportunity cost of money for employees, impact of salaries on hiring processes, etc. Salaries sustain personal and family life and helps people decide where to work. Employees drive your business forward, and if their income impacts family stability, that impacts productivity. Their salaries steer your company’s success. Paying employees better salaries is logical, to boost business output and decrease costs:
Limited Talent Pool
In the cut-throat business world of today, there will be a limited number of people with those necessary skills that are needed to excel in particular roles. Ideally, you must do everything to retain the most talented of those individuals on your team. The best salespeople, engineers, designers, and other team members are hot commodities. One of the best ways to attract and retain these people is by offering high pay. Giving above-average salary will attract talents who can impact your balance-sheet positively.
Creating higher outputs
Paying employees above-average salaries reveals you expect above-average work. Salaries are not the biggest motivators for employees, these certainly help. Higher salaries do incentivise a culture of higher outputs. If people are paid more than counterparts in other companies, it compels them to extra efforts. They work harder to deserve that salary.
Employees don’t leave easily
A well-compensated and productivity-oriented culture ensures long-term employees who understand the company systems, norms, and mission. This makes them more productive and creates better, stronger teams and professional bonds at the workplace. High employee retention equals lesser worker turnover, lesser disruption from new employees learning new duties. You spend less time and money for new hires and interviews as the recruitment process is costly.
Employees focus on work
When money is not a concern, workers can fully focus on projects with fewer worries about providing funds for home or resent about unfair compensation. That enables concentrating on office-work, with high productivity and better work quality.
Fairly rewarding people
Lost amidst all this is the simple fact that paying employees more is just right. For valuable, high-quality work, better compensation is deserved by employees who receive a fair portion of value added to your business. Apart from retaining all the profits among top executives, investors, those people who undoubtedly create value for you, should receive recompense. This is moral and pushes a culture of equality, which most employees cherish.
Fewer employees for necessary tasks
With superb employees, output is high. Two top players can accomplish as much as three less motivated/talented players. You actually need lesser employees in your business with savings in net salaries, while keeping your team leaner. This is just perfect for small business hungry for growth or to survive long term.
Summing Up: The benefits outweigh the costs
Increasing employee salaries may feel painful at first, with less profit for your business in the short term. Over time, it improves company culture and happiness and saves money. Eight performing employees earning $100,000 annually costs less than 12 average employees earning $70,000. Output is even higher with lesser employees. Enhanced employee retention leads to fewer expenses on recruitment. Increasing employee salaries not only makes them happier, but an investment for high-quality business and better productivity.