Fair Compensation Reaps Rewards
If you think it’s expensive to hire the right talent for your company, try hiring the wrong talent.
Every small and medium business owner and corporate recruiter knows they have to work within a budget, but experts agree they shouldn’t be slaves to specific salary figures. Executive compensation may appear excessive when seen in isolation, but you’ve got to look at the big picture, including what the potential hires can bring to the company and how they could have a significant impact on the company’s future bottom line.
Karen Swystun, president and CEO of Waterford Global Inc., a Winnipeg-based executive search and recruitment firm, says it’s absolutely crucial for organizations of all sizes to invest in talent. “That’s the core and base of your organization,” she says. “If you’re prepared to make the investment, you’ll reap the rewards.” Tracy Arno, CEO of Essence Recruitment Inc. in Saskatoon, agrees. “You need to pay according to the talent you’re looking for,” she
says. “You need to create a culture that is employee-centric. Your focal point is your employees. If you treat them well, they’ll stay and be dedicated to you and they’ll help grow your business.”
But before you make any offers, be sure to do some research about what your potential executive or employee should be paid. “Employers need to understand what employees are worth,” Arno says. “Somebody with one year of experience who faces a huge learning curve versus another person with 10 years of experience should absolutely be paid at a different rate. Employers need to realize that they’re saving money when somebody comes in and
can hit the ground running. They’re not having that gap of time and that learning curve.”
When you require a certain kind of expertise, you simply can’t settle for less in a candidate and hope they get up to speed quickly, Swystun says.
“It starts at the top. Your entire organization is affected,” she says. While recruiters at companies on the Prairies may think they’re at a disadvantage because of their location, Swystun says geography is not the primary driver when people consider potentially greener pastures. Geography has nothing to do with whether you can attract somebody. People are attracted to the opportunity,” she says.
According to Arno, the top five items on people’s wish lists are transparency in compensation, respect, professional development, the ability to have a direct impact on the organization and a solid compensation package.
The latter isn’t just money, it also includes other perks, including benefits, RRSP matching, profit sharing, purchasing shares, flexibility and bonuses.
An executive search firm can often guide organizations through hiring situations to allow them to see their investment soar through the talent they’ve hired, Swystun says. “You don’t know what you don’t know. If somebody said to you, ‘you can have somebody with a proven track record for a certain amount of money who will impact the growth of your company,’ what are you going to spend your money on? It’s a bigger risk to not make the investment on the person who has been there and done that,” she says.
But it’s not just along mahogany row where salary costs are rising—front line workers, many of whom have earned minimum wage for, well, ever, are also getting a raise. The pandemic, including billions of dollars in government aid for workers on both sides of the Canada-U.S. border, has changed the corporate work environment. As companies grapple with a labour shortage, they have no choice but to offer higher wages.
It’s Economics 101—supply and demand.
“It’s happening with financial services. It’s happening in industry. It’s happening in retail. You’re seeing it everywhere,” Jonathan Golub, New York-based chief U.S. equity strategist at Credit Suisse, told CNBC recently.
“The economy is overheating and companies, even though we have a high unemployment rate, cannot get the labour they need to meet demand and they are being forced to raise wages.”
If you won’t get off your wallet for potentially game-changing people, you simply won’t attract the top talent and that will have a negative effect on your bottom line, Arno says.
“You’ll have extreme turnover, which is extremely expensive (in training and learning curves) and the business won’t grow to its full potential because you don’t have the talent,” she says. Arno cautions owners of small and medium-sized firms to ensure they invest in both a marketing manager and human resources manager.
“They’ll always get an accountant, a lawyer, salespeople and administrative assistants, but the last two roles they’ll hire are marketing and HR. That’s completely backwards. That’s your brand and that’s your people,” she says.