Many organizations have lost employees during the continuing 2021 and 2022 resignation environment, and they’re seeing more “firefighting” than ever due to inexperienced employees at various levels of the organization, or being short staffed in particular roles. How can adequate pay contribute to the improvement of a more purposeful culture focused on real work rather than constantly reacting to urgent issues or emergencies?
When I started this “firefighting” blog series a few weeks ago, I shared findings from McKinsey’s research about the top three reasons employees are resigning: 1.) Uncaring leadership, 2.) Unsustainable workload, and 3.) Lack of development/advancement. My blogs provide strong guidance on mitigating these challenges. But now, let’s look at employees’ top reason for accepting their NEXT job offer – adequate pay.
What does “adequate pay” mean?
Adequate pay is fair pay. The answer to this can be determined by asking, “What are the norms in my industry related to paying for talent?” It used to be that you’d compare your organization to others in your geographic area, and that may still be true for some organizations. But are the organizations poaching your employees virtual or hybrid? You may need to broaden the geography. What are your competitors offering for pay and benefits? What kinds of flexibility are they offering related to hybrid work? Based on research, are your employees underpaid? If so, they know it, and the need is urgent to figure out practical ways to raise rates of pay and become more innovative and competitive with benefits. If your organization has seen high quit rates, the need to evaluate and improve rates of pay is extremely urgent.
Level Up
Since 2020, many employers raised pay to retain employees, and they particularly raised pay to attract new employees. Fortunately, many organizations did a great job in making sure their current employees (the ones that stayed with them, perhaps overworked, during the pandemic) got pay adjustments to equalize pay and account for tenure for similar jobs across the organization. These companies recognized the hard work, loyalty, and disadvantages of work during the pandemic, when training and employee development were largely ignored, and leaders were ill-equipped for coaching and managing employees remotely. Wisely, these organizations made changes to pay rates across the hierarchy to ensure longer duration employees were paid appropriately when compared to newcomers. This practice is vitally important to ”adequate pay.” This principle also holds true for mergers and acquisitions. Having differences in rates of pay for similar positions is asking for trouble; and unfortunately, the employees who’ll be the first to leave may be the ones you most don’t want to lose.
We also need to evaluate and improve employee benefits. Many organizations are finding great value in offering more training and development opportunities as well as better tuition reimbursement benefits for employees. In client organizations, I am seeing more and more generous paid time off, better tuition reimbursement, emergency childcare policies, and more flexible work. More and more, I am seeing that “voluntary benefits” of the past are now being provided and paid for by the employer.
Balance Pay Against Other Factors
When it comes to pay, many employees have told me that it all boils down to “pay per hassle.” It’s not just what you’re paid; its also weighed against the culture of the organization, the manager they report to, the stress of the job, the lack of flexibility related to hybrid work, etc. Through recent years, I’ve seen many employees move to different departments in their companies, looking for a better manager or better mobility, perceiving the move to be better than a promotion. Some employees move to different organizations looking for less hassle, more flexibility, or a better leader. In determining whether to leave an organization, most employees are not looking at pay first, as McKinsey’s research indicates.
Of course, the best way to deal with employee turnover is to prevent it. We can’t just look at pay and benefits. We need to provide better and more caring leadership, we need to make common-sense decisions about the unsustainable workloads our employees are enduring, and we must provide better advancement and development opportunities.
What clients’ employees are telling me reinforces the research around recruiting and retaining talent: we must improve our organizations’ cultures, leadership, development opportunities, and paths to advancement to stabilize our organizations, make them more resilient, and do away with firefighting.
For more discussion on this topic, please feel free to contact me or message me in LinkedIn.