How to use salary evaluation to retain employees and attract new ones

While several factors contribute to employee retention, there's no denying that compensation has become vitally important.
 

In 2022, CIPD reported that of the 20% of the British workforce seeking a new job in the next year, 35% cite better pay as their primary motivation.
 

In 2018, Total Jobs reports that 40% of women would quit their jobs if they found out a male colleague in the same role was paid more. Since then, research has found that women have been able to leverage the skills gap caused by The Great Resignation - many have opted to leave their positions for higher-paying roles (although it’s worth emphasising that the gender pay gap is yet to be closed). 
 

So, how do you ensure salaries are fair across the board while enticing new recruits? This guide covers fair salary evaluation, including salary levelling and salary benchmarking. 
 

Want to learn about other ways to retain employees and attract new ones? Explore alternative methods of combatting salary dissatisfaction. 
 

Conduct market research

Employees don’t want to work for below the market rate salary for their position and industry. 
 

Knowing the market average will help you negotiate salaries with confidence. 
 

But how do you discover the market rate?
 

A good recruitment company like Eden Scott will have insights into market data and can help with salary benchmarking. 
 

If you're going it alone, you can still access helpful salary insights through reference tools like CV library's salary guide and LinkedIn's salary tool.
 

Create a clear compensation strategy 

Creating a graded pay system will ensure that roles which require similar skills, experience and training are equally compensated.
 

Danielle Monaghan, VP of Global Talent Acquisition at Google, explains that “being fair and equitable goes a long way for employees to feel valued, engaged and retained."
 

Once you've created your system, the next step is aligning salaries with your new guidelines. 
 

A clear compensation strategy will also help you to offer fair remuneration to prospective candidates. This in turn will allow you to advertise salaries on job adverts with transparency, meaning prospective employees can choose if the compensation is in line with their expectations. 
 

Set up regular pay reviews 

"The implementation of a salary review process helps to ensure fairness and transparency at all levels of your company" – Factorial HR
 

Throughout a team member's employment, duties can often change and develop.
 

Regular pay reviews mean that you can make sure employees' salaries match up to the duties expected of them, as well as their performance and contribution to the company.
 

Consistent reviews reduce the risk of resentment building up within the team and can discourage employees from looking elsewhere. 
 

Frequent salary evaluation can also help to even-out pay discrepancies that may exist between new and longer-serving employees. 
 

Use salary scales 

CIPD suggests using a salary scale to ensure fairness and to avoid pay discrimination. 
 

Salary scales are beneficial as they allow for pay progression in line with an employee's development, without the need to secure a promotion. This arrangement means that you can reward staff for the experience gained at your business whilst ensuring new recruits are rewarded fairly for the skills they bring to your organisation.
 

Using salary scales can also afford you flexibility in the salaries you offer prospective candidates without causing friction within your team. For example, you might start a new employee on a higher rung within their salary bracket if their current compensation is higher than the starting salary or if your company is experiencing a labour shortage within their skillset. 
 

Final thoughts

The most important consideration when conducting a salary evaluation is how you will make salaries consistent across the board. 
 

If pay disparities exist within your company, they are bound to be discovered sooner or later, ultimately alienating staff. 
 

By assessing market rate salaries, developing a transparent approach to salaries and regularly reviewing compensation practices, you're much more likely to keep employees motivated and attract suitable candidates to your team. 

Next steps
 

Would you like help to source exemplary candidates? Learn more about hiring with Eden Scott, or contact us directly.