Source: Practical Guide to Human Resources Management by Fleet Street Publications (Pty) Ltd

Your employees are one of your most expensive overheads. However, the more you pay your employees, the more profit they will make your company.

On the other hand, it is true that the cost of personnel and social contributions are increasing continuously.

It is important for you to find out:

• Which parts of salaries are exempt from taxes
• Which incentives could be more effective than money
• How to respond to excessive salary demands
• How to get out of a remuneration agreement that is unfavorable for you
• How to change to performance-oriented rewards
• How to also pay employees who not work in the sales department, profit-related wages
• How to explain to all employees that income and career advancement are not related to age and length of service

3 tips on how to achieve more flexibility in terms of wages and salaries

1.      Clearly state in writing that no increase or bonus is guaranteed – it is dependent on the profitability of the company and the employee’s performance.

2.      When you give an increase to your employees, often a large percentage of it will go to taxes.

For this reason, you should change to tax-free or tax-preferenced remunerations like increased pension, motor vehicle or cellphone allowances.

3.      When one of your employees has successfully finished a long and difficult project, he will probably ask you for an increase.

Rather offer a once-off bonus. If you offer her a straight R5 0000, this might prove more attractive to her.

A salary increase of R300 will work out to be more expensive than the R5 000 after 1½ years. And the employee will start negotiations from a higher level next time.

It is not only the monthly salary that counts 

In the table below you can see that employees are not only motivated by money. Recognition is equally important. A competition offering rewards can also add to motivation.

Depending on what objectives you want to achieve, there are 4 types of incentives:

1.      Money has the advantage in that the amounts can be graded – and everybody can use it.

2.      Status rewards (certificates, trophies, etc.) stimulate self-esteem and prestige.

3.      A prize can be selected individually to always remind the winner of his excellent performance.

4.      Free trips provide a pleasant experience, but they could also be expensive.

Significance of human needs as seen