Indeed lists the 14th reason for people changing jobs as a person who is seeking a more financially secure company. They elaborate this statement with “Things like budget cuts and limited resources can be challenging to work with. As your company experiences financial hardships, you may feel less secure in your role. Finding a job that offers fair wages, room to grow, learning opportunities and regular pay increases can help you feel more confident that your company is doing well financially.”
This topic is one that comes up – daily in our career matchmaking and coaching services business. Financial security for both employee and employer come from expectation and perspective.
You may have an incorrect mindset, if you as an employee, have the perspective of any of the below for the company you are currently employed:
- I should automatically get a raise each year I work for the company;
- If the economy changes my employer should adjust wages;
- The company needs me more than I need the company;
- The company makes this money because of me; or
- I am only at this company because they pay me well.
Just like marriages, when one partner has self-thoughts that offer no consideration for how the other party feels; or what the other party needs, prioritizing with “me’s” and “I’s” can be the kiss of death for the future of careers and companies.
To the other extreme if your company paid you a million dollars a year, would you stay under all circumstances? According to Forbes “America’s richest billionaires have the same divorce rates as the average not-so-rich citizen.” What does this mean? No amount of money can guarantee a lifelong marriage. Each marriage has human emotions and problems, and no matter how much money you have, divorce can still happen if communication breaks down and plans do not align. The same holds true in the workplace.
Below are three things that experts advise businesses when it comes to wages.
1. Know your labor burden rate for each employee.
At Florida Construction Connection, we believe employees should be aware of their labor burden rate. For companies, the labor burden rate represents all of the costs associated with employing someone — including, but not limited to, salary (including overtime), benefits like health insurance and 401(k) contributions, and payroll taxes. This number is crucial for business owners to know to accurately calculate how much it costs to employ someone. This number helps company leaders to better forecast future spending, aiding in business and strategy decisions.
Conversely, employees that know their labor burden rate can also better understand applying that burden to the job at hand. If you send a superintendent with a labor burden of $50 per hour and they leave the project to run an errand that can be planned for a routine delivery or done by an employee with a lower labor burden, the choice of the right manpower for the job can not only add money to the bottom line of the company but increase its chances of stability and growth.
2. Know the overall labor burden you can carry for all employees, in totality, and what that number is in comparison to your projected net income.
After you have this number, there are a few to determine:
- What are the industry standards for that role, if available?
- What is the comparison to other equal or similar roles within the company?
- Is the rate you are paying that employee eligible for increase future?
3. What other factors should be determined and what are they worth or what will they cost?
Consider the following:
- What is the cost of onboarding this employee, both in terms of money and time?
- Does the employee make or save the company money directly?
- If this employee is being hired for a more senior role, can they increase the ROI, return on investment of other employees?
- Does the employee’s performance in comparison to ROI, return on investment and in fairness to other warrant a special rate?
Employees that want to understand other factors an employer considers before making a move due to money are wise. These employees are keepers and show that they care more about the company and making a difference than being in it for the money. They know that a temporary stall in getting a raise vs moving can be more beneficial to them in the long run. They value and understand the relationship. This is especially true when there is not growth within the organization. When an employee is asking for an increase in wages without knowledge of the formula their employer looks at when determining labor costs including the employees own wages, benefits, and other things such as training costs, a kink in the relationship is evident and move for the employee could be imminent.
You can fall in love with money. You can fall out of love because of money. John Di Lemme, Author, speaker, and career strategist states “If you focus on making money then you will fail! You must decide to focus on making a difference in other people’s lives in order to earn the right to be financially free.” Are you focused on the money or focused on making a difference at your current place of employment? If your answer is that your focus is to make a difference at your current workplace, this can open doors for you to earn more money.
Employee or employer – a raise without explanation is a future expectancy.
To Setting Mutual Workplace Financial Expectations,