Perhaps you’re having problems retaining staff, or maybe your business is doing particularly well and you’d like to reward your employees for their contribution. You may have considered raising wages across the board or introducing a bonus scheme. As there are pros and cons to both, it is worth considering these before deciding one way or the other:
Opting for pay rises
According to Canada Life Group Insurance, 32% of Brits believe a higher salary would boost their workplace motivation. As personnel is every firm’s greatest asset, it is worth doing all you can to keep your workers, particularly the loyal, hardworking types. Giving your employees a pay rise may:
• Make them feel more valued, particularly if it is a sizeable one
• Give employees a feeling of job security because a higher salary suggests the company is thriving
• Prevent staff members from leaving if they are currently earning less than those in similar employment elsewhere
However, pay rises can also have negative repercussions:
• If the hike pushes employees over a tax threshold they may end up paying a higher rate of tax overall
• If the pay rise is a small one, the tangible benefit each month may seem negligible, which defeats the object of a rise
• Upping staff salaries is a permanent decision; you cannot revert to previous pay rates if profits decline
Introducing bonuses
Bonuses can be a great way to reward members of staff for hard work or for excellent results, and they can be as big or small as you want them to be. You can also choose to pay them regularly or as a one-off to boost morale. While a pay rise may be quickly forgotten, bonuses:
• May help to increase productivity
• Are a great way to say thank you for a job well done
• Could improve staff retention if workers know a significant bonus is on the cards
However, bonuses may be self-defeating in some cases. They can:
• Be taken for granted if they are paid on a regular basis, and small bonuses may even make workers feel undervalued
• Make staff feel pressured and resentful if they are performance-related, particularly if one employee reaches a target and another doesn’t
• Make it tricky to be fair while making sure good performance is rewarded
Implementing pay rises and bonuses
Whichever you choose to implement, you will need to ensure that you comply with current legislation when it comes to raising pay or introducing bonuses. You may opt to implement changes or make additional payments via your in-house accounts team or by working with a payroll outsourcing company like Cintra Payroll.
Cintra Payroll provides tailored payroll services for each company it works with, ensuring that payments are accurate and are timely. Get in touch with us now!