It could make employees reconsider before jumping ship
IT training firm Koenig Solutions has introduced a new retention initiative that means if an employee is offered a job elsewhere, the company will match the salary for all staff in that role.
Even if the new job offer come with a significant salary increase, Koenig will match the raise for both the employee and their colleagues in the same role. The new policy is a bid to reward staff loyalty amid Australia’s fiercely competitive talent market.
HRD spoke to the firm’s HR and IT training specialist Chris Tzalabiras who said initially, the idea was introduced as a reaction to a string of five resignations, of which three staff members were able to be retained. As a result of discussions with staff, it became clear that the war for talent was pushing salary market value skywards. From there, the HR team’s focus turned from reaction to prevention.
“The HR team spoke to ten other employees who had also sought pay appraisals, based on the current market trends and after salary negotiations, they managed to retain all ten,” he said.
“The next stage involved proactively asking our key star performers about appraising their salaries based on the market trends, and so far, we’ve performed this exercise across 25 key personnel.”
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The final stage is ongoing, and that involves rolling out pay appraisals through other departments. So far, the raises have been between 50-80%, demonstrating the ballooning salaries in sought after industries like technology training. Tzalabiras said there was plenty of discussion around the risks of hiking salaries, but the firm wanted to get ahead of the trend and demonstrate commitment to their people.
The HR team carried out detailed risk assessments to weigh up the financials, as well as scenario planning so the organisation could roll out its new policy with confidence.
“There is a bit of a give and take in these situations,” he said. “The give is that yes, our salary expenses are going up. But what we're gaining in return, especially from key performers, is increased motivation, reduced burnout and making them feel more valued.”
Beyond that, Tzalabiras said the cost of turnover would be a significant burden financially. According to 2019 data from ELMO Software, the average cost to hire an entry-level position is $9,772. That rises to $17,841 for a mid-level employee and $23,059 for a senior-level manager. Recruitment is not cheap – especially at a time when businesses are fishing from a small talent pool.
“You’d like to think that every single staff member recruited will be successful, but in reality, they're not. You could invest a lot of money and time into them, and then in the end, they might not be the right fit for the company,” he added.
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It’s why companies across various different industries are taking the talent shortage seriously. By being proactive and instigating salary conversations early, HR leaders have an opportunity to address pay concerns head on.
Tzalabiras said the policy has only been in place since September this year but the company will continue to tweak and iterate as time goes on.
