What Companies Can Offer When They Can’t Meet Salary Demands

Fair pay has been a constant topic in business circles. Workers no longer accept extra responsibilities and long hours at their jobs when a raise that reflects those added duties isn’t offered. Business owners and company executives have been scratching their heads regarding how to address the rapid shift in dynamics between employee and employer, especially smaller organizations struggling in a stagnant economy or without the deep pockets to fund rising salary trends.

Since 2009, the year the federal minimum wage was raised from $5.15 an hour to $7.25 an hour, cost of living has increased dramatically. For 2023 alone, it rose by 8.7 percent. In 2021, the most recent year this data is available, CEO compensation was 399 times that of the average worker. At large organizations, CEOs get stock options, bonuses, company performance incentives; the average worker gets a salary, maybe a small bonus. They might get a raise that doesn't come close to keeping up with inflation or cost of living. Still, federal minimum wage remains stagnant.

The realities of a company’s ability to consistently increase employee pay to keep up with the rapid rise in cost of living and inflation, however, shouldn’t be ignored either. U.S. Census data shows that 98 percent of the 6 million employer firms in the U.S. have fewer than 100 employees. For those businesses, it can be next to impossible to convince employees to stay based on salary alone.

So, given these facts, how else could companies increase their retention rates?

What's Your Company's Total Compensation Package?

The total compensation package reflects all payments and benefits given to an employee by their employer. So not only is it their salary, but it’s their healthcare benefits, their PTO, their sick leave, commissions, bonuses, retirement savings plans, and flex spending accounts. These aren’t all of the things that could be included in the total compensation package, but are usually the main highlights.

All companies offer most of these things to full-time employees. If your company is having trouble keeping pace with salary demands, odds are you aren’t going to find extra cash to offer increased bonuses or pay a higher percentage of an employee’s healthcare. However, showing an employee their total compensation package can help them understand that your investment in them goes beyond just a salary.

Employers have also taken to showing their appreciation in other, old-fashioned ways. They might highlight an employee’s efforts in a company-wide email or send employees a DoorDash gift card.  

However, these shows of appreciation for hard work only go so far when cost of living expenses are rising faster than most employees’ take-home pay. A quarterly pizza party and a holiday gift card won’t have a positive impact on their day-to-day finances.

If your company’s salary falls short of employee expectations, there’s another tangible way to show appreciation.

Give Your Employees Freedom

Companies should seek to be generous and creative with their paid time off, sick leave, and remote-work policies.

Some people want to be in the office. Others prefer remote. Allowing for flexibility rather than forcing employees to come in when they’re just as, if not more, productive working from home only inspires disengagement and distrust. By finding effective productivity measures, this flexibility can easily be managed.

Yes, employees might do laundry or clean the dishes while working from home. But the time they save by not having a 45-minute each way commute means they’ll be more energized and more engaged. They’ll be happier working in comfortable clothes with their pet next to them instead of having to battle highway traffic just to make it to the office.

Generous time off packages are a promising option. Multiple studies have shown that employees actually take less time off with an unlimited PTO policy. They can take a day or two off to care for their sick child without worrying how much they have left in the bank. They can take a vacation with less guilt and come back refreshed.

What it comes down to is trust. It would be naive not to acknowledge the possibility of someone taking advantage of generous PTO and remote work policies. But the foolishness of one person should not warrant punishment for everyone else. You may not view it as punishment, but they will, and it will only serve to increase the likelihood of them seeking employment elsewhere. When they see a person who took unfair advantage of these policies get shown the door, they’ll know that they need to put in good work.

Trust and flexibility are two real, tangible, valuable things that employers can give to retain employees if they fall short of the competition on salary and benefits alone.
 

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