The economy is booming—and that means employees who have been loyal to your business for years might quietly be searching for new jobs. Just how happy are your small business employees? To find out, QuickBooks Payroll surveyed 1,000 employees at companies with 20 or fewer workers. Here’s what they learned—and what it means to your business.
Satisfaction doesn’t equal loyalty
More than half (51.3%) of small business employees are satisfied with their current jobs, and more than one-fourth are “very satisfied.” But in spite of this job satisfaction, 43% of small business employees in the survey say they want to change jobs in the next two years.
The lesson for employers: Job satisfaction itself doesn’t guarantee employee loyalty. For most employees, whether they work at large or small businesses, compensation is the number-one consideration when it comes to taking a new job or staying at a current job. Unfortunately, when it comes to compensation, most small business employees are less than satisfied.
Small business employees want more wages
First, the good news about wages: 48% of employees say they are fairly paid for the work they do. Now, the bad news: 47.5% of employees believe they are underpaid. Worse, regardless of whether or not employees feel they are paid fairly, 65% say their pay has not kept pace with the cost of living.
In other words, even if you’re doing the best you can do with your employees’ pay, and the wages you are paying are fair, they may feel the need to look elsewhere in order to maintain their standard of living. That could mean leaving to work for a big company that can offer a substantial salary increase or has more opportunities for growth and promotion than a small business does.
The survey found that more employees have switched from jobs that paid hourly wages to jobs that are salaried than the reverse. This is a good indicator that employees would rather have salaried than hourly jobs. If you’re worried about losing hourly employees, offering them a salaried position for a little bit more than their current hourly wage could be a way to boost retention, the survey suggests.
Another way to help employees boost their incomes without actually increasing wages is by offering a bonus; 14% of employees report receiving a salary plus a bonus. At the same time, some small business employees are suspicious of employers’ reasons for using bonuses. More than one-fourth (27.5%) of employees believe their employers use bonuses to justify lower base pay.
In addition, 30% say their employer uses employee benefits to justify lower base pay. In fact, nearly 61% say they would be willing to take a job with no benefits if it offered higher base pay.
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Why do small business employees feel underpaid? Among survey respondents who say they are underpaid, the number-one reason is “My expertise is not properly rewarded/recognized.” Sometimes, simply recognizing and rewarding employees can be enough to keep them on board.
For example, giving employees comp time off, bringing in lunch or a cake to celebrate the completion of a big project, or recognizing employees’ hard work in front of the rest of the team can all make a big difference in helping your staff feel appreciated.
Here are some other incentives that employees value:
- 76% want flexible work schedules
- 73% want performance-based annual raises
- 66% want discretionary bonuses
- 63% want recognition awards/prizes
- 57% want the option to work from home
What about benefits? As an employer, you know that benefits can account for as much as one-third of an employee’s total compensation costs. Many times, however, employees don’t realize how much the benefits they enjoy actually cost your company. This is especially true when it comes to health insurance. Since more businesses are requiring employees to shoulder a larger portion of the premiums, your staff may not be aware that what they’re paying could be just the tip of the iceberg. Let employees know how much your business is contributing toward their health insurance premiums and other benefits—this will give them greater appreciation for their benefits.
One disturbing finding of the survey: Of those employees who are eligible for overtime pay, more than 75% say their employer does not pay them overtime. And 16% of those who aren’t eligible for overtime believe they actually are eligible, but have been wrongly classified as exempt employees.
Overtime pay is a somewhat or very important source of income to almost half (47%) of employees in the survey, and if they can’t rely on being paid fairly for overtime, employees are likely to look elsewhere.
If your business isn’t accurately tracking and paying for overtime, you could be causing resentment among your employees—and laying the grounds for a lawsuit. Both federal and state laws regulate overtime pay, so not calculating overtime correctly or misclassifying an employee is exempt when they are not could get you in some real hot water.
Raise the bar
Among employees who have been in their current job for more than a year, nearly three-fourths (74%) say they’ve received a raise (of 3% to 5% on average).
Unfortunately, more than 41% of employees say they have never had a raise, and more than 30% say their last raise was between two and five years ago. Have your employees been waiting a long time for a raise? If so, this could be the time when nothing else will satisfy them.
Overall, 55% of employees in the survey say they would leave their job for better pay, while 52% would leave for better benefits. With the economy in good shape and unemployment low, take steps to reward hard-working employees—or watch them seek greener pastures elsewhere.