Small businesses generally can't pay as much as larger companies. But that doesn't mean they can't be competitive in nonmonetary and other creative forms of compensation, according to Mae Lon Ding, president of Anaheim Hills-based Personnel Systems Associates. Ding's company charges up to $275 an hour to design pay and performance management programs for clients.
Q: How can small-business owners find out how much the rest of their industry is paying its employees?
A: Employers absolutely need to know what the going rate for their employees is, and incidentally the going rate is rising very fast.
Employers can join a nonprofit association called the Employers Group. This group conducts annual surveys of over 100 different job titles in California, and they provide breakouts for Los Angeles, Orange, San Diego and Ventura counties and the Bay Area. The cost to join is nominal and it's based on employment size. So if you're a small employer, you'd pay maybe less than $500 a year. For that, you get not only the surveys but access to all kinds of employer resources.
Although salary increases are averaging 4.5% to 5% per year, good people--meaning above-average performers--should have their pay rise significantly faster. It would not be unusual for the top 20% of employees to receive 50% to 100% more than the average increase. The other thing I would say is if you really want to hold on to people, it's not always just about money. Probably one of the biggest advantages that a small employer has is the ability to treat every employee like a special person. And that goes a long way.
Q: What are some of the ways to treat an employee like a special person?
A: It might range from taking someone out to lunch to giving them the day off or letting them get off early a day or being flexible with their work schedule. There are so many things employers can do.
Big corporations have so many rules and regulations: You can't do this and you can't do that. But when you own the business, you can do anything you want. And that gives you the ability to treat employees the way they could not expect to be treated in a big corporation.
Particularly if you can't pay competitive wages, you have the ability to offer a quality of work life that is superior to that at big corporations. This will often win over employees who know they might be able to make more somewhere else.
Employers can also make use of formal and informal incentives to reward employees. Informal incentives are sometimes called a "spot bonus." It's catching someone doing something right and giving them an instant reward. It could be dinner for two or 20 bucks in the hand or a $100 bill. It's something unexpected, and sometimes the unexpected is the most powerful.
A formal program for a small business is usually some kind of a team system, a team reward. So if you're in a retail business, you can say, "If we reach X dollars in sales in any month, then we're all going to go to the ball game together or we're going to have a pizza party." For any kind of sales employee or managerial employee, you must have a formal incentive program.
An employer also gains points by getting to know each employee personally and listening to what they have to say and making them feel like they are an important part of the team. Ask employees what they think about how you can improve business. They tend to be pretty knowledgeable, and they appreciate the chance to make a difference.
Q: Are there advantages to working at a small business that employers should make sure employees are aware of?
A: There is an aspect to working in a small organization that can be a strong point as far as keeping quality employees, and that is the opportunity to grow professionally. Because they're in a small organization, they get an opportunity to do a much greater variety of things, and that provides more challenge and more learning opportunities.
I think that appeals to a significant number of people out there. In a large corporation you tend to be pigeonholed to a narrow set of duties.
If a small employer believes that they are very good at what they do, particularly at a professional servicing firm, they should strongly sell the opportunity to employees to work with them personally.
The opportunity to work closely with somebody who is considered to be very good at what they do is a nice professional development opportunity.
Q: What are some of the warning signs of employee unhappiness that employers should look out for?
A: I think No. 1, an employer has to be sensitive to their employees. Employees usually don't say anything if they are unhappy. But you can tell by how they approach their job, whether they approach their job with enthusiasm or with the minimal amount of effort required to get the job done.
One of the things I think an employer needs to do at this point is talk to the employee right away about their feelings about their job. Sometimes an employee believes he or she deserves more money than the employer can offer. Sometimes an employee wants to rise more quickly than the employer can allow.
A small employer doesn't have many job openings, so the opportunity for promotion is limited. That employee may have to move somewhere else to get to the next level. Sometimes employees want more or less oversight than the employer can or is willing to give.
I normally advocate that if you believe an employee isn't happy in their job, take action right away. And that means asking the employee if there is anything you can do to make the job more satisfying. Employers may find that the things the employee wants are not things the employer can give.
And if you can't make the workplace a better place for that employee, it's time to tell the employee that it's OK for them to leave. But if they decide to stay, tell the employee that they are expected to attack their job with enthusiasm. You've got to nip it in the bud and address it head on.