1. The lowdown on staff remuneration & retention in 2018
It’s no secret that pay increases have been few and far between in recent years, with wage growth in Australia currently sitting at a record low of 2.9%. Considering the state of our economy, this isn’t wholly surprising – in the past year alone, we’ve felt the impacts of everything from extreme weather events to political instability, both globally and close to home. With the International Monetary Fund predicting that Australian economic growth will only reach around 2.2% in the coming year, a return to the golden days of pre-GFC pay-packets does not seem imminent.
While the economy is certainly a contributing factor, it’s also unlikely that this is the only reason we’re seeing such sluggish wage growth. With the rise of the ‘gig’ economy, the way Australians are working is changing too, with online platforms like Uber, Deliveroo and Airtasker opening up more competition for hourly-wage jobs. Our perception of what it means to be an “employee” is changing – and so are our expectations.
In some ways, Australians in 2018 are demanding more, especially in terms of flexibility and culture. In other ways, we’re asking for less – especially in situations where our rights aren’t clear, or where we’re too insecure about our job to ask for a pay rise. As more industries embrace freelance and contract workers, these trends are likely to start affecting professionals too, especially if work can be done remotely.
2. What does all this mean for Australian businesses – and workers?
Anyone who has waited, hoped, asked or even fought for a pay rise will know how important it is to feel properly valued and compensated – and how off-putting (even devastating) it can feel to have your request refused. However, while there’s a clear link between salary and staff retention, you might be surprised to learn that pay isn’t the only thing that buys the loyalty of an Australian worker.
The 2017 Staff Retention Report from the Institute of Managers and Leaders (IML) drew on responses from 246 organisations across Australia, who shared their employment data as part of IML’s National Salary Survey. When asked about their employees’ top reasons for leaving the company, respondents stated that two of the top reasons were the desire to seek new challenges, and the fact their current employer provided limited opportunities for staff development. Salary was cited as the third driver – showing that, while money matters, it takes more than salary to keep a worker happy.
3. Employees don’t just want to be paid, they want to be valued.
High turnover isn’t just disruptive and potentially damaging for workplace culture, it’s expensive too. At IML, our research tells us that it takes an average of $23,753 to attract, hire and train a new staff member – a cost that most businesses would prefer to avoid. With this in mind, it’s key for Australian businesses to stay on the front foot when it comes to staff retention strategies.
According to 2017 research from the IML Staff Retention Report (a supplementary report from the data gathered from the National Salary Survey), some sectors may need to work harder than others. While overall staff retention in Australia decreased from 2016 to 2017, Professional Services, IT and Finance all saw considerably higher turnover than average. In contrast, Agriculture, Manufacturing and Mining were the most stable, with below average turnover.
Happily, it does look like Australian businesses are rising to the challenge of giving their people more opportunities to learn, grow and succeed. Henley Business School’s Corporate Learning Survey found that 35% of respondents spent more on training in 2017 than 2016, a 7% increase since the last survey. Participants also ranked their top challenges as managing the speed of change, and achieving cultural change. This is positive to see, as it suggests there’s an increasing appreciation for the way in which an employee’s experience can add value to their role – over and above the actual salary they take home.
4. How do you know what someone is worth?
One of the toughest questions for employers is how much to invest in the people who work for them. Calculating an employee’s worth is rarely straightforward, and there’s much more to it than assessing someone’s job description and performance reviews. A multitude of other factors also need to be considered, from an individual’s past tenure and future potential, to the cultural influence they have within the organisation.
When weighing all this up, it helps enormously to know what your peers are doing. After all, if you don’t give someone the salary, training or support they expect, there’s a good chance someone else will. Equally, if you overpay staff, it could have a detrimental effect on your bottom line, and create resentment within your team.
This is where resources such as IML’s National Salary Survey are invaluable. Due to be released on 30 April 2018, our latest survey not only provides a benchmark from which to make sound remuneration decisions, it also provides insights into how other organisations are approaching things like training and development.
As mentioned earlier, it’s important to remember that salary is only part of the equation. For some employees, having fresh challenges or a clear pathway within the business is just as important as salary (if not more). Fortunately, IML has the tools to help you to discover what your people want (such as profiling tools and 360-degree reviews), and many ways to recognise and support their growth (our Chartered Manager accreditation is just one example).
5. With all this in mind, it’s worth asking yourself how you’re deciding the value of your employees.
Is it something you determine based on budget alone? Is it perhaps more emotional than rational? Are you still in touch with what your peers are doing for their staff, and is your approach still suitable? If you’re uncertain about any of these questions – or whether you’re still ‘on the money’ where salaries are concerned – it’s worth finding out.