Have your staff outpriced themselves?

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What a strange question?  Let me explain.  Recently I had one of my longest employed staff members come to me and ask for a pay increase.  Nothing special here, as a rule the longer a staff member stays with you the more likely they will expect an increase in their pay.  Australia’s current awards allow for pay increases which attempt to keep in line with CPI and the ever increasing cost of living, but it won’t be long before your star employee realises their increased value in contrast to other employees.

I suggest you do pay good staff above the award, this will ensure that your competition doesn’t easily poach them, or the staff member doesn’t look elsewhere for work.  But agreeing to a payrise annually when asked could land you in a bit of trouble in time.  It’s not uncommon for me to meet with employers paying $35 per hour for a task that can be performed for $25 per hour.

A difference of $10 per hour over a 38 hour week can amount to $380 extra per week not including super and workcover.  This amounts to and extra $19,760 per year again not including super workcover or maybe even payroll tax!

So now ask yourself are you prepared to bear this annual cost to spare you losing an employee?

Employees will outgrow positions in your company.  Especially if you’re in hospitality.  Longstanding  staff can start working for you when they’re 18 years old or younger, while they’re living with mum and dad.  Their monetary requirements are minimal and they’re happy to just save for a car or have enough drinking money for the weekend.  Things change by the time these staff members reach their mid twenties.  They begin to consider savings and deposits for houses.

This is the game changer, they now need a greater income or more hours to reach their goals.  Often they don’t want to admit that they’ll also need to consider a career change to reach these goals.

Unless you have another role for this staff member which is worth more to you than their current role you shouldn’t fall into the trap of over inflating the value of their role in your business unless they can up skill themselves and add this value back to your business.

The subject isn’t an easy one to discuss, especially if the staff member who has outgrown your business or hospitality in general has been a reliable and long standing employee or even friend.  But you do the math.  The gap between a jobs value and an employee’s expectation may very well be too wide to cross.

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