Competitive pay is essential if you want to attract and retain talented employees. But the challenge for many mid-market companies is how to do this when staffing costs are already high and rising. Wages jumped almost 3 percent in the last year alone, according to the U.S. Department of Labor. The competition for skilled workers means that staff costs are likely to keep increasing.
No single fix will solve this perpetual challenge, but these creative tactics are helping many companies balance these pressures. Here are a few ideas for keeping costs in check.
Perks That Don’t Hit the Bottom Line
The option to work from home is quickly moving from a perk to an expectation of many workers. The Staples Workplace Survey found that 43 percent of employees consider remote work flexibility a must-have. Low-cost, flexible work options can appeal more than high-priced perks like tuition assistance and free gym memberships. They can also keep staffing costs low for companies as wages continue to increase.
Another affordable perk is unlimited vacation time. This approach eliminates the need for payouts for unused time when employees leave a company, which amount can amount to thousands of dollars per worker. Businesses that use this type of system report improved productivity and increased revenue without significant spikes in actual employee time off.
Diversify Employment Types
If you currently rely mostly on full-time workers, consider using more freelancers and part-time employees to manage staff costs through reduced taxes, benefits and overhead. Freelancers usually cost more per hour than permanent employees, but half of business leaders say it is still more cost-effective to use contractors as they are often more productive than full-time staff, according to WorkMarket.
Part-time workers can be your most productive and loyal staffers. Shifts in demographics and priorities mean that more people want part-time work than ever before. For instance, more than half of parents in a survey by online job-search service FlexJobs reported a desire for part-time work.
A few details make part-time work successful. Focus on roles in which people need specialized skills so that working hours are used effectively. Make these jobs even more compelling by offering “voluntary” benefits — such as dental insurance and financial counseling — that are paid for through payroll deductions. These benefits are attractive since employers can provide them at a discount.
Beat Back Overtime
To rein in rising overtime costs that can eat into company profits, look at employee schedules to examine how overtime is happening. Compare various shifts to find out if the pace of work isn’t matching up with the number of employees on a particular shift. Look for where you can improve processes to boost efficiency and reduce the need for extra hours.
Workforce management software can also help to identify shifts that need to be filled, flag discrepancies and effectively track overtime. Timesheets software provider TSheets finds that 25 percent of companies now use time-tracking applications. Whether you have a manual or digital solution, consider cross-training your employees. When you have more options for getting tasks and shifts completed, instances of overtime may go down.
Tie Pay to Performance
A performance-based structure that favors your best employees over across-the-board cost-of-living raises can provide long-term financial benefits. Top-performing businesses are more likely to use a merit-based pay system, according to PayScale, a salary data and software provider.
To implement this structure, determine exactly what merits a pay increase or bonus. For example, you could provide raises after employees surpass an annual sales goal or accomplish tasks set in past reviews. The key is making these guidelines clear and applying them fairly to avoid the appearance of bias.
Regularly evaluating how you compensate employees and allocate their time can help your company attract and retain talented workers, keep productivity high and protect your financial health.