Here is what organisations need to do to attract and retain their best talent when salary increases don't look very encouraging.
Many of us are returning to work from the holidays with long credit card bills to pay and looking forward to our next paycheck. As we settle our summer debt and start planning the next trip, we should be reminded that the slower economic growth in mature economies like Australia is keeping a check on pay rises. Those banking on salary increases to fund their next holidays might not be able to travel very far.
Korn Ferry ’s Salary Forecast for 2017 reveals that, adjusted for inflation, workers around the world are expected to see real wage increases of 2.3%, down slightly from last year’s prediction of 2.7%. Wages in the Pacific region are forecast to come in at a 2.8 percent growth, with a 1.8 adjusted for inflation growth. Australia will see a 3 percent top-line growth, a 1.4 percent inflation rate, and a 1.6 percent real wage increase. In New Zealand, a 2.5 percent salary increase is forecasted, with 0.6 percent inflation, for a 1.9 percent real salary increase.
A growth economy is what keeps many organisations and people going strong—and striving for advancement. But the economy fell off the cliff when everything from mining booms to stock market windfalls collapsed into pieces. Now, with interest rates low for so long and competition stiff, many industries and markets have hit a wall for the foreseeable future. Take away all those booms, and paychecks simply don’t hold the same promise that they used to.
What to do when the carrot is no longer as enticing
We know from the work we do with clients that when organisations have to pull back on salary and benefits, motivation suffers. So a question that reward and engagement professionals often ask us is: how can businesses propel employees to remain loyal and motivated to perform their best when the carrot is no longer as enticing?
An answer to that is to look at what motivates employees. Motivation experts have split motivation into two more manageable and measurable elements: intrinsic motivation and extrinsic motivation. In short, extrinsic motivation is a drive that comes from outside rewards or punishments; it’s what propels you to put in the extra hours so you can be eligible for a bonus, or so that you don’t have to get an angry 2 a.m. email from your boss. Intrinsic motivation on the other hand is a drive that comes from within; it’s the adrenaline rush you get from a challenge, or the satisfaction you get from nailing a presentation.
Organisations can address both motivation elements by introducing and promoting non-financial rewards. A Total Reward strategy that uses the right non-financial rewards will benefit most companies in difficult times and can make a substantial impact on employee engagement and motivation.
At Korn Ferry , we advise businesses to make more use of cost-effective non-financial incentives to help attract and retain their best talent. Here are a few recommendations:
- Make existing non-financial reward programs more accessible, such as remote working, improving work-life balance, or extra leave.
- Be completely transparent when communicating reward policies i.e. what do you reward and recognise and why – this helps employees be clear on what and why certain things are happening.
- Focus on each individual – align their role or certain things in their role that they get motivated by.
- Invest in training and development for the future and ensure that key talent especially see where and how they can progress their career.
Non-financial rewards can help you weather these bleak business conditions whilst keeping your employees engaged and performing at their best.
See the salary forecast for your industry, job level and country in our interactive with the Korn Ferry Personalised Salary Insight Tool