Average Small Business Employee Pay Goes Up For the First Time in 2014
The SurePayroll Small Business Scorecard has announced an increase in the average pay of small business employees by 0.2 percent in July. Marketwatch reports that this increase is the first increase in 2014, spurred by a profitable first half of the year for small businesses. An increase in employee pay can have beneficial effects throughout both local and national economies, with more cash going into circulation as consumers are paid more. Ideally, higher paying small business jobs can stimulate a local economy, which in turn leads to growth on the part of the original small business.
Should you give your employees a raise? Small businesses that have seen their sales increase leading to a more robust cash flow may choose to re-invest some of that liquid capital into their employee retention efforts. In particular, employees who demonstrate the potential to grow into leadership roles should have efforts made to retain them. An increase in salary is one of the most effective ways of keeping an employee around, so if business has been doing well a raise may be in order. Working without the chance of qualifying for a raise over time can make employee turnover much more likely, even under the understanding that company sales are directly linked to compensation. A raise after much hard work is a great way of rewarding employee commitment.
What if sales have been good, not great? While some businesses have reported strong sales and even high rates of growth, other businesses have been making sales but not experiencing the same robust demand. In order to support an increase in employee wages, these businesses must decrease their overhead. Revisiting a business plan regularly is a strong way to identify now obsolete programs and expenses, and company credit card accounts should also be reviewed both to get a better look at what is being purchased as well as weed out recurring payments for services that are non-essential.
What if sales have been bad? For some business owners, sales may have actually gone down, or regulations may have effected profit margins making it difficult if not impossible to think about providing more pay for employees. In these instances, while a raise may be off the table it is important to promote a sense of ownership and accountability within each employee, allowing them to feel committed to their roles and make a difference within your organization.
Photo Credit to Rob Lee on Flickr