The Benefits of Paying Your Employees More

Let’s start with a disclaimer.

As a business owner, the idea of paying your employees more might seem counter-intuitive, particularly at a time when the cost of running a business continues to rise.

But there is a strong business case for paying good people well.

Salary is rarely the number one reason a quality employee stays with a company. A higher wage cannot replace a strong culture, good leadership, training and development, career progression or genuine recognition.

In fact, some businesses need to offer higher salaries simply to compensate for what is missing in these areas.

The mining sector is a good example. High salaries can help offset long hours, difficult working conditions, time away from family and being disconnected from a local community. Yet plenty of people eventually leave these roles to work closer to home and spend more time with their families even when it means earning considerably less.

So, salary matters. It just isn’t the whole story.

Should You Pay Above Award Wages?

There can be real advantages to paying employees above the award level when the business can support it and the employee is delivering the value to justify it.

One of the things I encourage business owners to consider is paying their people enough to remove a question that can become a distraction:

“Am I being paid enough?”

When good people feel they are being paid fairly for the contribution they make, compensation becomes less of an issue and attention can remain on doing great work, developing their skills and contributing to the business.

Of course, paying more is a choice rather than a rule. Every business has different margins, roles and financial capacity.

But there are several reasons why paying good employees well can make commercial sense.

1. Better Pay Can Encourage Greater Effort

When an employee knows they are being paid well for their role, there is more at stake if they lose that position.

A well-paid role can be harder to replace with another position offering the same combination of salary, culture, conditions and opportunities.

That can create an additional incentive to perform well and maintain their position within the team.

This becomes even more powerful when the business has strong performance standards and is continually looking for quality people.

Employees should understand that they are valued but they should also understand that everyone has a responsibility to continue earning their place within a high-performing team.

2. Better Pay Can Reduce Employee Turnover

Replacing employees is expensive.

There is the time involved in advertising, interviewing and onboarding as well as the training required before someone becomes fully productive in their role.

There is also the impact on the rest of the team when experienced people leave.

Employees consider a range of factors when deciding whether to stay with a business. Salary is one of them alongside culture, leadership, flexibility, career opportunities, working conditions and the availability of other roles.

When employees are well paid and enjoy being part of the business, there are fewer reasons to start looking elsewhere.

Reducing unnecessary turnover means less time and money spent replacing people and more energy going into improving the business.

3. Better Pay Can Help Attract Better People

Quality employees generally know the value they can bring to a business.

When you offer competitive wages, you can put your business in a stronger position to attract experienced, capable and motivated people.

This doesn’t mean paying more automatically guarantees better employees. You still need a strong recruitment process to assess capability, attitude and cultural fit.

There will always be a risk of paying someone more than the value they ultimately deliver.

However, businesses that combine competitive remuneration with strong recruitment standards are generally better positioned to attract people who can make a meaningful contribution.

The goal isn’t simply to pay more.

It is to attract and retain people whose contribution makes that investment worthwhile.

4. Better Pay Can Support Employee Wellbeing

Financial pressure doesn’t disappear when someone arrives at work.

The rising cost of housing, food, transport and everyday expenses can create considerable stress for employees and their families.

Paying people fairly can help reduce some of that pressure and give employees greater capacity to look after themselves and their families.

That can influence everything from stress and sleep through to general wellbeing and their ability to remain focused at work.

A healthier and more financially secure team can also mean fewer distractions, less absenteeism and greater consistency.

Help Your Team Become Financially Well Organised

There is another way business owners can support their people that doesn’t necessarily involve increasing wages.

Help them become more financially literate.

As the cost-of-living increases, knowing how to manage money effectively is becoming an increasingly valuable life skill.

You don’t need to become your employees’ financial adviser. However, you can encourage better financial habits and provide access to resources that help people understand budgeting, saving and planning for their future.

At PROTRADE United, one resource we recommend to our team is The Barefoot Investor by Scott Pape.

The principle is simple: learn how to live well today while preparing for tomorrow.

Culture Still Comes First

Paying higher wages alone will never build a great team.

You cannot compensate for poor leadership, a weak culture, limited opportunities or a workplace where people don’t feel valued.

But when a strong culture is combined with competitive wages, clear expectations, development opportunities and genuine recognition, you create a much stronger proposition for quality people.

The question for business owners isn’t simply:

“How little can we pay for this role?”

A better question is:

“What do we need to offer to attract and retain the calibre of people we want in this business?”

Build the right culture. Pay good people well. Give them opportunities to grow and create an environment where quality people want to stay.

Over time, that combination can help you build a stronger team and a better-performing business.

Written by Jon Mailer
CEO | PROTRADE United