As always at the start of a new year, labour market commentators make predictions about wage growth for the forthcoming twelve months. Currently, there are opposing views on what the year ahead will bring.  Strong wage growth is predicted as unlikely for 2016, according to analysis from the Resolution Foundation think tank, who estimate that real pay is likely to be just 1 per cent higher by the end of the year.

Conversely research by reward specialists Korn Ferry Hay Group predict that workers will receive a real wage increase of 2.3 per cent on average this year due to increasing employer optimism.

Clearly, it’s a difficult prediction to make, and time will tell whether there will be pressure on company pay budgets this year. However, regardless of the market, no doubt you will have your own salary bill pressures to contend with over the year. When there’s pressure to increase salaries, either because you’re finding it hard to recruit, or are worried about retaining your existing staff, it’s worth considering other ways to make the most of your available budget.


When recruiting:

If you’re finding it hard to recruit someone for a particular role, and have become aware that it’s because the salary you are offering is too low, think about job re-design.

In most roles there are normally a mix of tasks and activities, some of which require a higher level of experience or skill than others. If you know that the salary you are able to afford is on the low side for this type of role, consider removing some of the higher level tasks from the job description, or setting them at a lower level.

For example, if you were recruiting for a marketing manager – rather than expecting the job holder to be responsible for setting your marketing strategy as well as implementing it, you could remove the strategic element and focus the role on implementation. Someone who implements rather than creates the strategy is likely to be less experienced, and will therefore command a lower salary than their more experienced counterpart.

You could then buy-in expertise from an external consultant to develop your marketing strategy with you. Whilst this may seem like an additional expense, it is likely that the overall cost of buying in that expertise from an external specialist will be end up being cheaper than the ongoing employment costs associated with recruiting a senior employee to do this for you internally.


When trying to retain staff:

It’s true that money is a motivator, and we all know the boost to morale that a pay rise can bring. However, that boost, and the associated increase in motivation and productivity, is usually short-lived. For the employee that is. For the employer, it represents a permanent and ongoing increase in cost that can spiral once you factor in the associated increases to pension contributions (and potentially bonuses) that an increase in base salary can bring.

Sometimes you have no choice, and you know that increasing someone’s salary is the right, and necessary, thing to do. But if you are looking for ways to give employees a boost, recognise their efforts, and differentiate yourself as an employer, then consider these ten low cost/no cost ways to reward and motivate your employees:

  1. Saying ‘thank you’.
  2. Letting them leave early on birthdays.
  3. Public recognition via team meetings/company blog/ Twitter/Facebook.
  4. Providing interesting work.
  5. Giving feedback (not just during the annual appraisal).
  6. Giving magazine subscriptions to your employees (to a relevant industry/professional magazine).
  7. Sharing business information and involving employees in decisions.
  8. Celebrating achievements – company anniversary, winning a new customer, meeting a significant deadline.
  9. Flexibility over hours/work location.
  10. Providing free fruit in the office.


All of these are ways of recognising and rewarding the efforts of your employees. Whilst low cost, in a business where salary budgets are tight, they can all help to create an environment where staff morale, and therefore retention, is high.


For more information and advice on recruitment, job design, employee reward and retention, please contact  or call 07929 021850.

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