The money conversation is always difficult. As a small business owner, tight budgets and limited resources make it even harder. So how do you attract the best talent without the funds of larger competitors? And how do you manage the pay expectations of your staff when a raise could mean the difference between a profitable month and operating at a loss?
Here are some of the best ways to handle the money conversation from Senior Employment Relations Adviser at Employsure, Jonathan Wilson.
Understand the value of different roles
“It’s true that a good salary attracts and keeps good talent. It shows you value your employees and boosts their self-worth,” Wilson says.
“However, as a business owner, you don’t want to overspend on pay.”
Understanding the market value of different roles can be a difficult balancing act, but taking the time to do your research will make sure your compensation is fair and – most importantly – legal.
“You have to weigh up what a prospective employee wants, what they’re worth on the market, what they’re worth to your business, and what you can afford to pay,” Wilson says.
“If you plan to employ someone on the minimum wage or offer overtime, you’ll need to check the law to make sure you’re compliant. There’ll be other legal issues you need to understand, so talk to your advisor and check out the Fair Work Commission.”
Supplement salaries with benefits
If you want to show your appreciation for your staff but don’t have budget for a bonus, consider rewards that aren’t purely monetary incentives. Supplementing salaries with benefits is a simple and cost-effective way to show your staff you appreciate their daily contributions.
Wilson says these can be informal, like sharing verbal recognition of a job well done.
“Forward voicemail messages that compliment a team member’s work. Ask a person to share their accomplishment with others as a way of recognising the person’s ability and role,” he says.
Formal shows of recognition include: “Devising a peer nomination program, where staff are encouraged to nominate their peers for recognition, movie tickets or gift vouchers, and authorised time off – a full day or half-day.”
Don’t be afraid to ask
The money conversation can be equally difficult for employees who feel they deserve greater compensation for their efforts. Communication here is key: establishing discussions about pay as an open two-way conversation, rather than a one-way dialogue, will remove the stigma from asking for a raise.
Breaking the hard news
Equally important is sitting down with your staff to help them understand why they didn’t get a raise. Wilson says in these situations thoughtful, considered communication is key.
“If you know that “no” will be your answer, but you’ve been put on the spot, buy yourself time to do some homework,” he says.
SME owners should ask the employee to explain their justification then set a date to follow up with a private meeting. Before this meeting, Wilson suggests seeking feedback from colleagues or peers who interact with the employee to see how they’re performing against their goals.
“During the meeting…make the employee feel valued and appreciated,” he says. “Clearly outline your rationale, which should be focused on what the employee can do to get on track for a “yes” the next time around.”
Employsure is the largest provider of workplace relations services in Australia, providing small business owners the right advice, documents, tools and protection to achieve business confidence. https://employsure.com.au/