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What Can You Offer Employees Instead of a Pay Rise?

Published October 16, 2019 (last updated December 4, 2020) -
workplace meeting culture

Money doesn’t have to be the default means of compensation – here’s how you can reward employees instead

It can be a tricky scenario. What is the best approach for employers to adopt when an employee requests for a pay rise?

Maybe the employer cannot afford it, in which case negotiations become downright uncomfortable. Even if an employer could afford a pay rise, maybe it’s in their best interest to reserve the extra funds to develop other aspects of the business. So how exactly should one handle this?

With the recent increase in New Zealand’s minimum wage, there is a possibility that employees who were earning above the minimum rate before the amendments may also be looking for a pay rise.

Below are some non-monetary alternatives employers can consider.   

Flexible working arrangements 

If the old adage is anything to go by, time should be valued as equally as money. One way an employer can offer an employee more “time” is through flexible work.

Working a day or two from home, starting an hour later, leaving an hour earlier – these are all fine examples of flexible working arrangements that you could provide an employee.

While this may sometimes pose an inconvenience, it’s a more cost-effective and arguably just as attractive an offering. A New Zealand study, Survey of a Working Life: 2018, found that employees with flexible hours reported higher levels of satisfaction with both their job and their work-life balance than those without.

The one caveat: consider the practicality of this option. Flexible working arrangements should only be considered if you can truly accommodate for them. There’s no use having a good employee who is missing in action when you need them the most.

Employer Tip: There are also obligations on employers to consider flexible working arrangement requests made by employees with only certain grounds of refusal.

Provide value through further training

At the end of the day, this is about an employee seeking more value from their current position. Money is simply the default means of compensation. As you’ll soon discover, employers can offer just as much value from further training.

This is an investment in the employee’s future career. Enable an employee to further explore an aspect of their employment that they are passionate about. This will set them up for success by providing them with the tools necessary to progress professionally.

The skills an individual develops at any given position of employment are invaluable. Some would even go so far as to say the value of finely-honed skills are intangible. We do, however, foresee employees favouring the more tangible choice of money. Which brings us to the next option…

Plan for future succession

 Where the previous section covered helping an employee move horizontally (i.e. moving beyond their role by providing the opportunity to cross-skill), this section covers moving an employee vertically – that is a promotion within the capacity of their current role.

Granted, not everyone that asks for a pay rise will be a high-potential employee. The individuals who you have identified as a high-potential employee, however, may be in the prime position to be earmarked for future promotion – and even future succession.

  • Become a mentor to the employee
  • Imbue them with more trust
  • Gradually charge them with more responsibility
  • Place the employee in scenarios that will test and sharpen their skills
  • Regularly give the employee constructive feedback
  • Teach them the nuances and intricacies of the business beyond their position
  • Most importantly, lay out a pathway marked with goals and expectations to track progress

That way, when the opportunity to promote arises, the high-potential employee will be able to transition to the open role seamlessly. Hopefully at a time where the employer is in a better position to offer the employee more, including a pay rise.

This will grow to be a long-term investment for both the employee and the company.

About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small and medium businesses, with over 5,500 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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