The current economic climate which is seeing rising food and fuel prices while house prices sink, is making many people worry. We’re aware that circumstances are getting difficult for certain sectors, especially for property developers. At Maven Training our clients are medium and large enterprises. It’s our mission to help them achieve optimum performance but this can be challenging when their employees find it difficult to meet the commitments of both their family and working lives.
Clients are coming to me and saying “I’ve got to spend my limited resources on retaining the best staff – if I don’t give them a salary increase they will leave.” In fact this request by beleaguered line managers to their superiors is not confined to periods of economic stress like the one we’re going through now. Even during the good times, line managers are often under pressure to pay their staff more to keep them doing the same job.
It’s easy to think that paying staff more will result in them becoming re-energised and recommitted to the business. Certainly staff paid on commission can attest to that. However, over 90% of staff have a fixed salary and benefits package that incorporates an element of discretionary bonus. The vast majority of employees know what they will be paid each year. They also know roughly how much their colleagues get and they have a good idea of what similar jobs pay. Managers therefore have to determine whether an inflation busting pay rise for a few key staff will make a difference.
Even with a doubling of inflation pay and assuming the person is doing the same job, the maximum net monthly gain to the staff member is £300 with the lowest being c.£20 (post tax).
From these figures we can glean there’s no real benefit in paying higher salaries. There is no rational reason to pay existing staff more unless they increase productivity to offset their increased salary.
So what else can organisations do to make sure their staff are happy and can achieve their objectives?
This is where Maslow's hierarchy of needs comes in. Written by Maslow in 1960s, he defined the 5 key stages of an individual's focus.
At the bottom, job security is key. The ability to pay the mortgage and feed our families is core. The security aspect of Maslov’s hierarchy is the one I find really interesting. As companies start downsizing, how do employees retain job security? I think there’s a dynamic link between job security education, up-skilling and training.
A survey conducted by IES for the NHS in 2003 asked 10,000 employees in 14 NHS organisations what contributed most to their level of job satisfaction. The answers were:
- Training development and career
- Immediate management
- Performance and appraisal
- Communication
- Equal opportunities and fair treatment
- Pay and benefits
- Health and safety
- Cooperation
- Family friendliness
- Job satisfaction
Note how pay ranks 5th against job security which is 2nd and the most important criteria is training. In the subsequent four years, training has remained consistently at the top of the survey results.
If we now look at what training costs organisations – from £50 for an on-line health & safety course at the most junior level to £2500 per day for top level coaching. A mid-level, five-day course costs around £1500. Couple this with the positive impact of getting out of the office and away from day to day pressures, and you begin to understand the real benefit of training. After a relevant and worthwhile training course, the employee returns to work feeling inspired, re-energised, valued and can add a new level of knowledge and understanding to their job.
Unfortunately the uncertainty of the economic climate looks like it’s going to be with us for a while. But both employers and employees can still find a way to remain motivated and focused on their objectives, and if they do undertake a training programme they’ll be even better placed when opportunity knocks again in the future.
