How small businesses can compete with competitor salaries

The employment market is getting more and more competitive. And against this backdrop, small business owners can feel daunted when it comes to assembling their own A-team.

Smaller companies usually can’t compete with the salaries offered by bigger competitors, and that’s a big factor during a cost of living crisis. But although the economic climate is a factor right now, the mindset of many job hunters has been shifting for a lot longer.

Pay still matters, particularly when prices are high. But while take-home pay was once the be-all and end-all for potential employees, today’s talent are often prioritising personal and planetary wellness over anything else.

1. Prioritise employee values over value

For many people, the deciding factor in where they choose to work isn’t in what a company can do for them, it’s what they are contributing to the world.

At Lumina, we surveyed thousands of UK workers and found that 3-in-5 workers who didn’t feel their employers shared their values were considering leaving in the next twelve months.

Some of them had already left. One-in-five (16%) 18–24-year-olds left their last employer because they didn’t share their values. Likewise, 12% left a previous role as a result of their employer’s inaction over sustainability.

These people then often pursue career routes that better match their values, even if that means choosing to work for a smaller business and a lower salary.

These days, potential candidates take a more holistic view of their lives. They often choose mental wellbeing, personal development and values-alignment over a few extra pounds per hour. And when it comes to values, societal and environmental action rank very high on talent’s priorities.

CSR and ESG-focused policies are meaningless unless they leave the page and are demonstrable in your business model, your culture, and your employee experience. But by offering an inclusive place of work that doesn’t compromise on what matters, you’ll attract the most capable and loyal workers.

2. Create opportunities to grow and make an impact

To attract and keep talent, a business needs to develop an Employer Value Proposition (EVP) that upholds an employee’s values as well as their needs. And it is here that smaller companies have an advantage over the big kids on the block.

It’s hard for larger companies to switch to a more sustainable business model. But smaller businesses are more agile and can use this flexibility to adapt to the needs and concerns of their people.

According to Herzberg’s Motivation Two-Factor Theory the causes of job satisfaction and dissatisfaction exist on two separate planes. You can reduce employee dissatisfaction by addressing things like salary and workplace relationships, but that doesn’t actually help with employee satisfaction. Having your needs met is important, but it’s not the same thing as finding fulfilment in your work.

In terms of giving your employees a reason to get out of bed in the morning, smaller businesses can often get the edge. For a start, they can more easily provide opportunities for personal growth and individual impact. And for some smaller businesses, the work has more meaning in and of itself.

In other words, a large organisation might be able to offer a fancier job title, but you can offer your team a chance to make a mark on the world – and that counts for a lot.

3. Measure what your business is doing and make changes

By offering more of the things that build workplace satisfaction, a smaller business can be an attractive alternative to higher salary roles in bigger companies.

These changes need not be massive. For example, offering flexible working arrangements will attract people who prioritise work-life balance over competitive compensation. It’s all about creating a culture people want to stay part of and championing personal and professional development.

When we asked thousands of UK employees what they value at work, three-quarters (73%) believed salary is important. That’s fair enough – few people have the luxury of not minding what their salary is. But salary wasn’t the only thing they believed to be important. There was also work/life balance (63%), flexible hours (44%), and feeling valued by their employer (40%).

It’s essential to take an inventory. Do you have a commitment to equality, fairness and diversity? Is your business actively involved in the community? According to the Cone Communications Millennial Employee Study, 64% of Millenials won’t take a job if their employer doesn’t have a strong Corporate Social Responsibility policy.

If you’re really serious about measuring what your business is about, you might want to consider switching to a more ethical pension or going B-corp.

4. Provide values-based employee benefits

In our survey of UK employees, 42% said that perks make them more loyal to their employer.

Perks like discounts offer an affordable method of helping an employee’s salary go further, which in a cost of living crisis matters a great deal. But for a lot of talent, particularly in the tech sector, these discounts are expected as a bare minimum. It’s what you offer beyond this that your employees will take notice of.

The respondents voted ethical perks as the number-one sign of an ethical business. That’s the beating heart of what we’re doing at Lumina: making it easy for employees to make conscious choices, offset their emissions with tree planting and be part of creating a better world.

Value-based benefits are an opportunity for companies to showcase what matters to them. Done well, they offer an affordable way to take care of our employees through the cost of living crisis, include the unincluded, and stave off environmental disaster. If you want to talk more, get in touch.