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The past several months have seen incredibly high rates of people resigning their jobs. This, paired with growing inflation, indicates that it is increasingly important for employers to plan and prepare strategies to retain employees.
One of the most effective ways to do this is to be transparent, and budget properly to give fair annual raises to employees.
Budgeting for Merit-Based Raises
Merit increases are raises given to employees who have demonstrated the most productivity and made significant contributions to the success of a company. An annual merit increase plan is the money an employer sets aside to award these raises.
You should add total compensation statements to your annual merit increase plan, and factor in other considerations such as inflation to ensure that you have an accurate picture of what your annual spending will be.
Being Transparent With Employees
Being transparent is an important part of employee retainment for both new employees and those who have been with the company for several years. Being transparent simply means sharing information with those who work for you so that they understand why things operate the way that they do.
Opportunities for Raises
If employees aren’t aware that their efforts have the potential to be rewarded, they can become discouraged and feel that there is no reason to stay in their current position. Help employees understand their compensation plan by being transparent about the opportunities available to them.
Explain to employees how annual raises are determined to give them something to work for and keep this information documented in a way that is visible as a reference to anyone at the company who is interested.
Job Expectations and Company Culture
Besides being transparent on earning potential, you should also make sure employees are well aware of what is expected from them and what your company policies are. From day one of hiring someone, make clear to them important details such as time off policies, benefits, their expected workload, and other information.
Try to be as accurate as possible to set the employee up for success. Employees who are aware of what their job entails, and how that might change over time, are less likely to feel upset when their workload fluctuates a bit. When things become harder at times, employees will be more understanding if it was part of the job description.
Helping both new and old employees understand the company culture you are aiming for can help them feel like they are a part of the business. When people feel comfortable and happy in their job, they are more likely to stay for years to come.
Involve employees in discussions about company policies and the general atmosphere of your business. When someone gives a suggestion, try to help them see how they have been heard and how their words are being given proper consideration.
Transparency Benefits all Parties
In addition to helping to motivate employees, transparency can also benefit the employer by setting up the proper expectations before it’s time to talk about raises or other work-related matters. If everyone knows what the expectations are, there will be less room for disappointment and disputes between either party.
Setting Clear Expectations and Rewarding Hard Work
At the end of the day, what most employees want is simply to be rewarded for the hard work they are putting in. Annual budgets are important not only for recognizing employees who go above and beyond what is expected of them, but also for keeping up with inflation.
To help keep valuable employees in the teams where you need them this year, it is a good idea to plan ahead and create better communications to benefit employees and employers alike.