When the economy is going well, companies need to be more aware of whether they are over- or underpaying their workers. Overpaying workers has a clear negative impact on your bottom line. On the other hand, when workers don't feel like they're being properly compensated, they are far more likely to become disengaged or even leave the company altogether.

The following advice will help you understand the warning signs that you're tipping too far in one direction or the other when it comes to employee pay:

Do your homework

The easiest way to determine whether you're overpaying or underpaying your employees is to look up average salaries for those positions online. There are a number of data sources you can rely on here, and doing so will help you determine what you should be paying your workers based on their roles and experience levels. If you find yourself over or under those norms, it's important to consider why that may be the case, such as if there's fluctuating competition for talented workers in your field.

Working with a business advisor like Ulton could help you uncover inefficient compensation - in either direction - and help set you back on the right course.


Crunch your own numbers

Of course, when trying to work out what you should be spending on your talented staff, you also need to look at your own bottom line. Even if your salary offerings are exactly in line with industry averages in theory, you may find that you simply have too many people on staff, or too few, to match them in practice.

These issues can lead to bigger problems for your company. If you have too many people on the payroll, you're not only spending more than you should, but you might not have enough work to go around so that you're getting as much value as possible from every employee. If you have too few, your employees likely have too much on their plates and are struggling to keep up with what's being asked of them.

Consider your hiring pool

If you find you're overpaying employees, it's wise to find ways to pay other workers properly, at a lower price. For instance, recent graduates often require less in salary because they have limited or no experience. Data from the Australian Association of Graduate Employees suggests the average Australian graduate will be paid less than $65,700 in 2019, whereas the average full-time earner among all workers makes more than $82,400.

An experienced human resource consultant could help you find ways to better address the issues of onboarding new employees, including the best ways to attract exciting young talent.


Don't think pay alone is the biggest factor

If you find you don't have much financial flexibility at all, you should know that salary isn't the only thing your employees care about. One recent poll from Robert Walters found that large percentages of all people looking for a job are willing to give up a higher salary if they get better perks - which don't necessarily cost you much at all.

For instance, almost half of the survey's respondents said they would take less pay for a more flexible schedule, and more than two in five said they would do so if they had more options to work from home. Similar numbers responded similarly if employers would be willing to give them more time off.

Clearly, there are many moving parts to consider when it comes to worker pay and it's not always easy for any companies - let alone small or medium-sized businesses - to identify when salaries are creeping too high or lingering too low. Working with a respected consulting firm like Ulton can help clear up these issues and streamline your business operations, so get in touch today.

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