It’s a situation every manager dreads. You have to tell each of your team members that there’ll be no salary increases for the foreseeable future.
Far from an enviable position, but one that does come with a silver lining. Money isn’t the only perk that motivates staff. In fact, 89 percent of employees between the ages of 18 and 34 would prefer a perk to pay a raise, and 70 percent of those between the ages of 45 and 54 feel the same.
This, of course, doesn’t mean you should just forgo salary increases because staff may value time over money. Paying people what they’re worth just makes good business sense, and you can trust that the competition will gladly snatch a top performer away if given the chance.
So, the question remains: when you can’t offer people an annual raise, what’s a good alternative? The following are often a good place to start:
1. Performance bonus.
If a raise isn’t in the budget, a one-time performance bonus could be enough of an incentive to maintain employee morale, satisfaction, and engagement until you can offer an actual salary bump.
2. Flex time.
A perk employees value most is flexibility — even more so than pay. Eighty-eight percent of people would more heavily consider a job if the employer offered flexible hours. In lieu of a raise, consider giving staff more flexibility in their schedules.
As far as perks go, second to flexibility is often telecommuting, with 80 percent of people saying they’d consider a job if the employer offered the option to work from home. Give employees the opportunity to telecommute one or two days a week — it’ll save on their transportation costs, which is basically money in their pockets.
4. Unlimited vacation.
Did you know that two-thirds of people would consider taking a lower-paying job if it came with unlimited vacation? Not only could this serve as a sign that you trust your employees to manage their own workloads but the policy could convince people to forgo salary increases for the year.
Depending on your industry, your employees may be eligible or eager to participate in a professional organization. It might not be much, but you could always offer to pay for the dues associated with their participation.
6. Development program.
Sixty-three percent of Millennials feel their leadership skills aren’t being developed — at least according to a recent Deloitte Millennial Survey. They’re also 68 percent more likely to stay at an organization for more than five years when working with a mentor. Consider establishing a development program in place of a bump in pay.
7. Tuition reimbursement.
Establishing a tuition reimbursement program has a monetary value for many employees, and it also demonstrates that — even though you can’t offer a raise — you’re invested in their professional development and future.
8. Transportation reimbursement.
Gas, tolls, fares, and parking fees all add up. Offer to give a set amount of money back each month for employee transportation expenses. If that’s not feasible, look into providing some sort of discount for parking or using mass transit.
9. Personal perk.
Smaller organizations may want to sit down one-on-one with employees to explain the situation and come up with an individualized solution to no annual raise. One person may want additional time off, while another may take a membership to a gym or professional organization.
Sure, you might save a few bucks by skipping that annual raise. But those few bucks will come at an expense: turnover. And with turnover costing as much as 150 percent of the salary for the vacated role, offer the raise if you can swing it — if not, then an alternative is your best bet.
If you’d like more advice or insights for improving your business or building a stronger workforce, please feel free to contact our team today. We’d be more than happy to discuss your needs and help you determine what resources are necessary to make a real difference for your company’s future.