Are Your Starting Rates Supporting Employee Performance?

In the grand scheme of things, how well you compensate employees from the start can influence both the short and long-term performance of your work teams. When employees know that they work for an employer that values their contributions with a transparent salary policy that reflects this, a beautiful thing happens. Work becomes more rewarding in a tangible way. Salary isn’t a sore point, but rather a demonstration of support for the efforts of employees at all levels.

How Higher Starting Salaries Benefit Business Success

If you are wondering what’s in it for your business to offer a higher wage for your entry level employees, consider that starting assignments are often in client-facing roles. Employees who are compensated well tend to be happier and more loyal to the company. This translates to an overall better customer experience. The investment in your people is worth it when your company develops an outstanding reputation for customer care.

A Strong Case for Generous Starting Rates 

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Offering an above average starting salary offers several key advantages for an organization.  These may include:

  1. Attractive to top talent in the industry
    When your business offers more than the average starting salary and benefits to new hires, it creates a reputation that’s highly positive to quality talent. The only way to true business sustainability is to attract the best employees who can take the company into the future with strong skills, leadership, and innovation. This means you must consider that a reputation for paying your entry to mid -level people will help you get in front of these candidates first.
  2. The performance for pay connection is made
    Employees may not immediately comprehend how important their contribution is to the organization unless they earn a wage that reflects this. Therefore, a good starting salary is the pathway to demonstrating how their performance is tied to the profitability of the company. A business that offers more than just the minimum salary tells employees that the company they work for is in good standing financially.
  3. Employees get on board with organizational objectives One of the main reasons your business will want to offer a higher starting wage for new hires is to help them get on board with the company goals sooner. Companies that invest in the success of their staffers reap the rewards with a more productive workforce that helps them meet objectives. Earning buy-in from well-compensated employees is priceless to the success of your company.
  4. Eliminates “system thinking” of employees
    Instead of incremental bonus and pay for performance programs, which create short term bursts of productivity centered on active campaigns, a higher starting salary supports more even levels of productivity. This is important because the organization relies on consistent hard work from employees to remain competitive in the market.
  5. Appeals to the emerging workforce
    Traditional pay for performance models that stressed spending more time on the job in exchange for overtime pay were appealing to Baby Boomers and Generation X. However, with an increasing presence of the younger workforce made up of Generation Y and Z, a more balanced work life is preferable to long hours on the job. Therefore, a generous starting salary appeals to the upcoming workforce.

It’s often recommended that you focus on offering a salary that’s at least 2 to 5 percent above what the competition is doing to experience the above benefits. Learn more about managing your compensation strategy with a highly competitive starting wage when you download a copy of PayScale’s 2014 Compensation Best Practices Report!


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