Employee salaries are a critical business decision made by company leaders and HR managers. There's much to consider: current and future company revenue, the opportunity cost of money going to employees as opposed to somewhere else, the impact of salaries on your hiring processes, and so on.

These decisions are so crucial because of the impact salary has on the employee experience. That money helps sustain their personal life and drives many of their choices outside of work. It is also one of the key details people consider when choosing where to work.

Your employees drive your business forward, so if their income impacts their stability in some way, that's going to impact their productivity. That means their salary is directly linked to your company's success.

Logically, therefore, you should pay your employees above-industry-average salaries. Here are seven reasons why doing so will boost your business output and actually decrease your costs:

1. There's only so much good talent out there.

In our ever-changing business world today, there are only so many people with the necessary skills to excel in certain roles. You should do everything you can to get the most talented of those people on your team. The best engineers, designers, salespeople, and everyone in between are hot commodities.

One of the most effective ways to attract these people is through high pay. Offering an above-average salary will help lure A players who can significantly impact your business's bottom line.

2. It creates a high level of output.

By paying employees above-average salaries, you are essentially saying that you expect above-average work. That may seem shallow, but that's the world we live in. While pay and benefits may not always be the biggest motivators for employees, they certainly help.

The truth is that higher salaries tend to incentivize a culture of high output. When people perceive that they are getting paid more than their counterparts at other companies, it often compels them to expend extra effort. They will work harder to demonstrate that they deserve that money.

3. Word-of-mouth recruiting may improve.

Highly compensated employees in a high-output environment may be happier with their job, especially if they enjoy the work. Assuming that you work hard to engage these employees meaningfully, they may be thrilled to be at your company.

Top-notch companies engage their workers not just by paying them more, but also by doing things like giving them personal attention, praising them publicly, or involving senior employees in hiring decisions.

In turn, they may want to recruit their highly skilled friends and those in their network to join your team. This will create a positive loop of top talent working for your company.

4. Employees won't want to leave.

A well-compensated and engaging culture will make employees more likely to stay in their jobs long term. The longer someone is at your company, the better they understand the systems, norms, and mission. That can make them more productive as well as create stronger teams and bonds in the office.

High employee retention also means you will not be churning through workers as quickly. This means that you will experience less of the disruption that comes from new hires having to learn new duties.

You'll also spend less time and money looking for new hires and interviewing. The recruitment process can be costly, so avoiding it as much as possible can be a positive thing.

5. Employees can focus more attention on the work.

When money is less of a concern, workers can more fully focus on their projects. They will have fewer worries about staying financially afloat at home or about being unfairly compensated. That can make them more present in the office, leading to higher levels of productivity and better quality of work.

6. You will be fairly rewarding people.

Perhaps lost amid all this is the argument that paying people more is just the right thing to do. When someone does extremely valuable or high-quality work, they deserve to be compensated for it. The thought here is that they should be receiving a fair portion of the value that they are adding to your business.

Therefore, instead of keeping all of the profits among executives or investors, people who undeniably create much of the value should be receiving some of it. This is perceived as moral and can help push a culture of equality, which is something most employees care about.

7. You'll need fewer employees to accomplish necessary tasks.

With best-in-class employees, output can be significantly higher. Two A-team players can accomplish the same as three less engaged, less talented players. Subsequently, you may need fewer employees on your staff. That can save you in net salaries and keep your team more lean. This is perfect for any small business looking to grow or survive long term.

The benefits outweigh the costs.

Increasing employee salaries can feel painful at first. It may mean less profit for your business in the short term. Over time, though, it may not only improve company culture and happiness but also save you money. Eight all-star employees receiving $100,000 a year will cost you less than 12 average employees making $70,000. Output might even be higher with the smaller number of employees. Plus, increased retention will lead to less money spent on recruiting.