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Pay Raises vs. Vacation Time: Which Perk Benefits Everyone?

It can be difficult for a company to determine whether to raise salaries or in

Employers often struggle to keep their employees satisfied; unhappy workers can lead to a high turnover rate, excessive resources spent training new hires and strained client relationships. Companies are sometimes torn on how to keep employees satisfied and working hard. They struggle to determine what will keep them happy and balanced. 

Two of the most common perks a firm offers workers? Paid vacation time and pay raises. But which benefit provides the most advantages for both the business and the employee? There are plenty of factors for companies to consider when doling out perks in the new year, and management teams should be aware of them when reworking policies or rewarding employees for exemplary work. 

What do employees want? 
Supervisors are often eager to keep their best employees happy and eager to find out what perks will keep them happy and productive. Several recent surveys indicate workers may be itching for a pay raise, perhaps a result of the long recession and rocky recovery. However, this may depend entirely on the employee. 

A survey conducted by Harris Interactive on behalf of Glassdoor revealed 60 percent of workers were hoping for a salary raise as an employer perk, while 36 percent sought additional paid time off that didn't count against their vacation days. Similarly, a survey from Working Mother magazine revealed 61 percent of working moms would accept a 20 percent salary increase as opposed to an entire year off work.

However, A Mercer survey indicated time off may be preferable for many employees. Recently released data showed American employees are eager for more paid time off and chose a week of vacation time over a one-time $500 increase in their employer's matching contribution to their 401(k). 

"Employers worldwide are asking their employees to make more and more decisions for themselves when it comes to their benefit programs," said Dave Rahill, president of Mercer's health and benefits business. "Employees valuing more time off and increased pay in the current stress-filled economic environment may be understandable, but there are other benefits that have the potential to create more income protection through health benefits and income replacement through retirement and savings vehicles. This challenge puts even more pressure on employers to deeply understand and communicate the value of various benefits to their employees so they can make smart choices."

Thinking about boosting employee pay or vacation time?
Employers determining whether to boost worker pay or offer more vacation time have plenty to evaluate, as a variety of factors can contribute to this decision. When trying to make the choice between more vacation time and pay raises, be sure to consider:

Workplace needs and requirements. Management teams should carefully review business needs when thinking about giving out more vacation time rather than a pay raise. Some industries experience peak periods during certain seasons or months, which may make it difficult for employees to use their additional vacation dates at certain times of the year. This may result in the need for a business to change more policies that dictate when a worker can and cannot use their extra vacation days.

Employee preferences. While many companies have strict policies that ensure each employee gets a raise annually or a certain amount of paid vacation days per year, some businesses may find that flexibility can be helpful. For example, a single mother may prefer a raise, but a veteran staff member in a high-stress position may benefit from more vacation time. If a firm can adjust its policies to best suit the needs of employees, it may find they are more productive and satisfied with their careers. 

Other benefits. Paid vacation may seem like an obvious choice for one company, but if another offers employees the opportunity to work remotely most of the time, employees may already feel this freedom allows them plenty of time to unwind, making a pay raise something that may be more appreciated by these workers. Other perks can have an impact, too, so employers should carefully consider their benefit packages when determining whether to increase vacation time or raise salaries.  

How do you determine employee benefits? Do you find increased vacation time or pay raises are key to keeping employees satisfied?