In a perfect world, employee salary increases are always commensurate with the level of contribution and overall value of each team member. In reality, Engineering Managers often face budget constraints that limit them from giving as many salary increases as they’d like.
Unfortunately, sometimes you need to make some tough calls. This is where having criteria for deciding who gets a pay rise is essential to keeping your most valuable talent satisfied. With engineering skill shortages reaching an all-time high and market pressures increasing, Managers are often stuck between a rock and a hard place when it comes to keeping their most valued employees motivated without going over budget.
That’s why we have put together this guide to help you allocate your salary budget wisely, including some more tips on how to keep employee morale high when offering a pay rise is out of your budget.
Employee Skill or Qualification Level
Firstly, you need to consider the employees’ skills and qualifications. With skill shortages in Queensland on the rise, the labour market is becoming increasingly competitive. Top talent is more than likely being headhunted and so you need to be sure that your most skilled and qualified team members are being looked after.
It’s also worth noting your team’s qualifications. For example, a recent graduate from the University of Queensland’s Master’s in Engineering program is likely paying off at least $32,000 in HECS-HELP debt. If you want to benefit from their expertise for the long term, you’ll need to take their career investments into account and compensate them adequately.
Typical Market Rates for Each Role
When deciding who to offer a pay rise to, one of the most important factors to consider is the typical market rate for each role. If you’re currently paying less than the market average, it’s likely that your employee is already aware of it and it’s possible that they’re considering looking for a position that pays them award rates or higher.
Keep an eye on the going rate for each role to ensure that your employees are being fairly compensated. If a valued employee is being paid less than they could elsewhere, they need to be prioritised.
If an employee has gone above and beyond their role, smashed their KPIs, and delivered outstanding results all year round, they need to be rewarded for it.
In 2021, a survey by LifeWorks found that one in five Australians quit their job due to feeling underappreciated. And a report by PwC found that 25% of Australian workers value remuneration and reward above all else.
Keeping both of these results in mind, underpaying a top-performing employee is likely to make them feel underappreciated, increasing the likelihood that they will move on. For this reason, high-performing employees should be one of the first people you consider when deciding on who to offer a salary increase to.
Length of Service
While the length of service doesn’t always equate to value, it’s important to keep an eye out for your longest-serving employees. It may be costly in the long run to continually increase an employee’s salary who has been with the company for years, but it may be even more costly to lose a team member with years of knowledge and experience.
Consider that the employee has invested a considerable amount of time in the role and that they will expect a return on their investment in the form of regular pay increases.
Employees who are carrying a heavier load compared to others need to be compensated for the initiative and additional stress that they take on. Most Engineers are happy to take on more responsibility, but if they’re left with no more than a “thank you” for their troubles, they may feel resentful and may be less inclined to take on additional responsibilities in the future.
Engineering Managers need to be aware of the level of responsibility their people are taking on and to ensure that an employee’s salary matches their responsibilities on the job.
Bonus: Non-Monetary Incentives
While you need to be careful about how and when you offer non-salary benefits, if properly used, they can do a lot to increase employee satisfaction without increasing salaries.
If an employee doesn’t meet the above criteria for a salary rise, but you still value their contributions, you might want to try any of these:
- Travel stipends
- Flexible hours
- Mental health and wellness initiatives
- Additional leave
While many of these incentives may not work if the employee is expecting a raise, they can be a powerful way to increase employee satisfaction while keeping within budget.
With an increasingly competitive labour market, having criteria at hand for deciding who to offer a pay rise to is essential for keeping employees satisfied and motivated without going over budget.
Though with increasing market pressures, many Engineering Managers are left with a limited budget and are struggling to secure their talent. If this sounds like you, why not reach out to YourResourcing? As Queensland’s leading Engineering Recruitment Agency, we’re well-equipped to help you with deciding who gets a pay rise, or any of your recruitment needs you may have.
Get in touch with one of our friendly team members, today!