Like many employers, you may be nervously watching retail giants like Target and Wal-Mart once again increase their starting wage rates, just in time for the retail season. Target is increasing thousands of employees’ pay to $11, hoping to stay ahead of similar increases in the last year by Wal-Mart and other rivals in the war for talent. Target has said it will increase its starting pay to $15 by late 2020.
If these retail giants continue to up the compensation ante, or if you’re already competing with other organizations that pay significantly more than the current federal minimum wage of $7.25, you may be feeling pressure to remain competitive through your compensation strategy.
Unless you have an unlimited compensation budget, we suggest that you instead focus–and really communicate to applicants–what else you can offer. Indeed, beyond sheer dollars, you may have other ways to attract qualified applicants. For example, if you can identify possible career paths and opportunities to grow in specific positions, if you can cite an impressive average employee tenure, and/or if you can speak to your company’s culture, the “vibe,” and the importance of the work you do, you will likely increase the number of entry-level applicants who want meaningful work, a good culture, and a potential career.
While money will always attract certain applicants, a longer-term and more effective alternative to salary wars is to focus on defining and selling the unique advantages of working with you versus at Target or Wal-Mart. Address your commitment to career progression when interviewing applicants. Build work groups and teams that feel genuine pride in their contribution to the bottom line. Help employees really understand how their work advances your organization. Create a culture where your employees believe that they really are your most important asset. Focusing on these intangibles costs time, energy and, yes, also money, but it also yields a stronger, more motivated workforce that will stick with you when retailers who depend on sheer dollars to hire enough employees once again raise their starting wage.
To paraphrase Peter Drucker’s oft-quoted observation, “Culture eats [your compensation] strategy for breakfast.” But if your strategy includes building a culture that can withstand compensation pressures, you’ll be well ahead of organizations who rely on high hourly rates to attract candidates.