We all know the importance of having good staff and retaining good staff and by now. We should also know what motivates individuals to stay at our organisation, Great working conditions, attractive culture, interesting and challenging projects, recognition and reward for effort to name a few.
Why do some organisations continue to think they can still do all the above except reward for effort and still have the best team on board. The other factors are all very important no mistake; however if individuals are not paid well by you (in their eyes) they tend to look for a company elsewhere that will pay them well.
Let’s say for arguments sake the average going rate for all staff in a construction company is $150K PA. Company B decides they want to keep things tight and only pays a mean of $125K. Whereas Company A’s average salary is 175K. Company B may save a bit on fixed overheads but at what price? What types of people will that company have working at their organisation? Probably a group of underachievers, maybe not that experienced or qualified and dissatisfied workers, they know that company A over the road pays above the average salary and their company B pays below. When looking for staff, Company B always finds it difficult and always compromises on the individuals they actually want due to lack of interest of good performers wanting to work there. Performance of hired individuals are often poor, they just do enough to get the job done. Lack of quality staff leads to poor company performance and mistakes on projects are common. Often company B does not get a second contract awarded to them, or similarly only gets the smaller projects and not the main stream quality cream work they actually want.
In contrast Company A has a crack team, they attract the best people in the business, when they are looking for new staff they have no problem with choice, they choose from the cream. Individuals working there enjoy the fact that they are being rewarded handsomely and go the extra mile. Morale and staff retention in this company is high, everyone is surrounded by top performers, clients notice this and the company not only wins the best projects but can ask a premium for their work.
It’s not rocket science but it does make sense……Are you penny wise and pound foolish?