Using Wage Increases to Combat Inflation

With soaring inflation comes employee turnover as people change jobs to get ahead. So, employee retention, as difficult as it has already been over the past 18 months, is more important than ever because employee turnover is costly. Many of our clients have been using wage increases to retain their best talent and have experienced the following benefits:

• Cost savings. Increasing salaries is more cost efficient than hiring and training new employees.
• Greater worker productivity.
• Enhanced employee morale and loyalty.
• Rise in talent attraction.
• With respect to manufacturing, manned machinery reduces the risk of increasing opportunity costs.

If you have an employee earning an annual salary of $75,000 and you increase their salary to $85,000, it will cost you an additional $10,000 per year. However, if that same employee resigns, your costs could exceed 5x that amount. You will be faced with the cost of posting the job, the cost of the time and effort spent interviewing candidates, opportunity costs associated with the open role, etc. And when all is said and done, there is a good chance you will need to pay more than a $75,000 salary to attract a new, unvalidated employee anyway.

Learn more about the true cost of vacancy here.