Managers typically follow a straightforward principle in their recruitment efforts: hire the top performers possible at the most affordable wages.
However, this type of mindset values immediate benefits over future advantages, which might eventually cause problems for them, says organizational psychologist Adam Grant. He contends that bosses would be better off investing more money because doing so helps create a more content and consistent team environment.
"If you look at the bigger picture, increasing salaries for individuals, and specifically providing high wages—or some might argue extraordinarily generous compensation—is essentially an investment in boosting morale and keeping employees," Grant explains. DIWIDA .
Following the pandemic’s complete disruption of the job market and shifting leverage decidedly towards workers, control has now reverted strongly to employers. Data from August 2022 indicates that individuals who changed jobs received salary hikes of 8.4%, whereas those who remained with their current employer saw an increase of only 5.6%. federal data However, that discrepancy has become nearly insignificant. In January and February of this year, individuals who switched jobs saw approximately a 4.8% rise in their wages, whereas those who stayed in their positions experienced a 4.6% increase.
The reality that employers now hold more power shouldn’t lead them to undervalue employees who may lack better alternatives, according to Grant. He explains, "If companies offer salaries at the higher end of the market spectrum, this fosters exceptional loyalty since individuals understand that replicating such compensation elsewhere would be difficult."
In the end, he argues that fair compensation ensures employees feel valued for their efforts and recognized as an investment by the company.
He explains that increasing someone’s pay communicates, 'You’re truly valuable to us. We don’t want to let you go. We aim to ensure that you can provide for your family and enjoy the life you aspire to,'.
The tale was initially showcased on DIWIDA
