How Can We Motivate Long-Tenured Employees Facing Slow Growth and Salary Stagnation?

Hello, Good Morning! I am working for a large group of companies that have 30 different types of businesses. Salary and benefit packages are at market standard levels, considering the types of businesses. I find that I have to offer 20-30% higher salaries when recruiting new employees from the market.

Challenges with Employee Growth and Motivation

One of the main challenges I face is finding alternative solutions for existing employees who experience slow growth due to their long tenure with the company and the limitations of the annual increment policy. Over time, they become demotivated. I am seeking some ideas to address this issue.

Thanks in advance!

Revising Salary Scales and Incentive Plans

In this type of situation, one step could be a revision of scales if it is due and could be considered. It is stated that the salary levels are market standard, so there may not be much scope. However, any increase in salary is only an extra burden on a long-term basis, and its motivational effect is little and without enduring gains.

Initiating an Incentive Plan

One solution I would recommend is to initiate an incentive plan so that the employees are rewarded handsomely out of the extra earnings from the current level. For senior employees, you can build in a factor that would be more generous to the more experienced ones than the freshly recruited ones. As the incentive is linked to productivity and efficiency, the company is getting extra returns without any additional burden.

I know a practical situation where the efficiency increased by approximately 25% when the incentive scheme was revised to match the employees' expectations.