Many companies tend to offer salary increases right after a positive annual performance appraisal. While rewarding employees is great to keep them engaged and encourage high calibre performance in the future, not all organisations can keep up with yearly salary increments for a good number of their staff.
This fact has become even more true as companies worldwide struggle to shake off the after-effects of the worst parts of the pandemic. Unfortunately, the battle for top talent keeps increasing, so there’s always a better paying job offer waiting around the corner for your best people.
Suppose your company is not in the financial position to offer annual raises to high-performing employees. In that case, other simple initiatives can help employees feel rewarded, recognised, and improve their level of job satisfaction.
Below are some easy to implement initiatives to implement in place of a pay raise at your organisation:
10 Affordable Alternatives to a Salary Raise
1. Performance-based bonus
Set up a performance-based bonus programme that employees get when they hit identified and measurable goals tied to individual or departmental KPIs.
A bonus programme is great because it’s a one-off payment that does not affect the regular salary structure within the company. Monetary bonuses also improve employee engagement and help to boost their performance at work.
2. Professional training
Instead of a salary increase, your organisation could offer training opportunities to help staff develop themselves, learn new skills, and prepare for more significant responsibilities. The organisation could also help foot the bills for employees’ professional certification.
Learning and development opportunities like this have the double advantage of improving employee retention, motivating employees, and helping the organisation groom employees to take on more senior roles.
3. Paid time off
Another good alternative to a salary raise is by choosing to reward employees’ effort and performance by giving them bonus paid time off work.
The additional paid time-off can be given as a one-off reward instead of being consistently applied in subsequent years. The number of bonus paid time off given should be proportional to the level of performance the employee has shown, as it will set a precedent for employees’ expectations in the future.
4. Work flexibility
If your employees still come to the office to work when their location does not affect their work, opening up the option of remote working (or a hybrid system) is something they would likely welcome.
As remote working becomes the accepted norm worldwide, employees seek work opportunities that offer remote working and are more likely to leave jobs that do not.
Offering a promotion without a corresponding raise can be tricky because employees could start to quietly resent what they might see as exploitation.
You can let your employees see that the promotion is a result of the organisation’s trust in their ability to handle greater responsibilities, communicate the financial condition of the company, the effect the promotion will have on their career trajectory, and other benefits (if any) the role offers. If the organisation intends to provide a pay raise eventually, the timeline should be communicated to the employee.
6. Mentoring opportunity
Another alternative for a salary raise would be to arrange for one-on-one mentoring opportunities with top executives (within or outside the company) for high performing employees.
The training and experience would set them on the path to top roles within the organisation, with commensurate salary raise in the future.
7. Financial assistance
Worrying about unsolved financial problems can cause your employees to lose focus on work. You can lift some of these burdens by providing incentives in the form of health insurance, day-care facilities, children scholarship initiatives, access to loans and financing, investment knowledge and opportunities, etc.
8. Award and recognition
Organise an end of the year award night to publicly recognise and celebrate employee achievements.
The deserving employees could be celebrated before the entire organisation and awarded monetary or material gifts as a token of appreciation.
This initiative is helpful for how it helps employees feel that their hard work is getting the deserved attention, and at the same time, does not make any change to the organisation’s payroll.
9. Allowances and benefits
Another affordable alternative to salary raise is offering allowances based on relevance to your workforce. If a good number of your employees have a long commute, giving out transport allowance is a good way of showing support.
The organisation can also organise free lunches (or a feeding allowance if employees work remotely), data allowance, and low-cost benefits like movie tickets, shopping vouchers, etc.
10. Stock option
Offer employees an opportunity to become stakeholders in the company as a reward for their performance.
The organisation can offer company shares for free or at subsidised rates so that employees gain the opportunity to become stakeholders in the company as a reward for their performance, motivating them to work harder.
Other possible alternatives to a salary raise your organisation can explore are offering sabbatical leave, access to needed professional resources, overtime bonus, etc.
Whatever options your organisation chooses to explore, it’s essential to be sure that the benefits offered are considered relevant by your workforce to ensure that it would have a positive effect on their motivation, engagement, and performance.
It’s also vital that the organisation explains why certain employees might get some perks while others might not (if that’s the case) to communicate a sense of fairness and transparency.