7 signs your employee compensation could use a boost


There’s a fine line between getting employee compensation right and getting it wrong.

Obviously, you want to get it right. Taking the time to explore the resources at Compensation Today, including articles such as this one, is a great start.

But there are other ways to determine if your compensation program needs a little something extra to make it even better.

We’re talking about reading the signs that your compensation program could use a boost.

Sometimes the signs are so subtle they’re easy to miss. Other times, the signs have been around so long they’ve been accepted as normal. Still other signs are glaring, but maybe you haven’t known how to address them.

Whatever the case may be, read on to learn the signs of a compensation strategy gone astray. Of course, we provide actionable steps to correct them.

Sign #1. Employee tardiness and increased use of sick leave

One of the first signs that employees may not be earning enough is a lack of enthusiasm about coming to work. More frequent tardiness, call-outs, and no shows are all signs your employees may be trying to avoid work. Get a good system for tracking employee attendance, and enlist your management team to find out why employees have developed such bad habits. Pay could be the problem.

Sign #2. Lower-than-average retention rates

Got employees leaving after just a few months on the job? This could be a sign that the compensation isn’t right. Consider benchmarking your positions against the market. PayScale is a good resource.

Sign #3. Employee grumbling

When employees believe they aren’t earning enough, complaints often follow. Some employees may even start talking about what the competition pays. Keep your ear to the pavement, and try to get at the root of the grousing. If it’s money, and your employees are good performers, consider ways to boost the compensation.

Sign #4. Lagging recruitment

Salary and other forms of compensation are top selling points with candidates. So, if your recruitment efforts aren’t getting a good response, this could be a sign you’re not offering enough incentive. Think about raising the bar a little with a more generous benefit package, coupled with a slightly higher salary and a few unique company perks.

Sign #5. Low benefit enrollments

Employee benefits are a critical part of any compensation package. If your employees aren’t enrolling in and using their benefits on a regular basis, it could be the benefits aren’t perceived to have much value. That’s a waste of money and a morale buster. Review benefit enrollment on a regular basis and make adjustments as needed, using employee input as a guide. Some of the most popular benefits, like flexible work schedules, don’t cost anything at all.

 

Sign #6. Friction during performance reviews

Increased friction during performance reviews is a sign that something is out of whack. Reviews can be tough no matter the circumstances, but increased conflict between management and employees in this area is cause for concern. One solution is to schedule salary increase a few months after the performance review. Use the performance review to focus on performance and development only, and leave the pay talk for another day.

For example, you could schedule reviews in January and then process any pay raises with your fiscal year beginning in July, or whenever it makes sense for your company.

Sign #7. Negative exit interview feedback

Pay close attention to what exiting employees have to say about their compensation. Because they’re leaving, they may be more likely to speak honestly and openly about wage dissatisfaction. Use this information to improve your compensation program for both future and existing employees.

 


4 Comments

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  1. 1
    Wayne Forster

    Compensation should definitely be separated from performance discussions, not just in terms of schedule but also completely de-linked structurally. Compensation is determined by a number of factors, including the going market rate for the position, competition for labour, financial capability of the organization, etc.

  2. 2
    Debbie Jones

    What are your thoughts: You have an employee, who is the only person hired and available to perform a specific duty. This duty has to be performed at varying times and days, morning, night, week days and/or weekends with no predictable consistency. This employee is also responsible for many other duties which need to be performed during normal Monday through Friday working hours. These daily duties can consume an expected 8 hour work day. This employee is paid a salary based on a 40 hour Monday through Friday work week. Then you tell this employee to adjust their normal 40 hour work week to compensate for the overtime hours and weekend hours so that they don’t work more than 40 hours per week.

  3. 3
    Tom Baker

    We have found that compensation is most effective when it goes beyond market rate. Compensation should be an investment rather an expense which means performanc must be an integral part of compensation.

  4. 4
    Bob Moklowicz

    RE: Debbie Jones, 7 Jan:

    What are my thoughts, Debbie?

    First thought is, I’d sure like to come to work for YOUR company! No idea where you are or what industry you’re in… In the Silicon Valley (CA) Semiconductor industry, all direct support (non-assembly) employees are EXEMPT due to a special loophole in the wages and hours law exempting so-called “computer workers” (only vaguely defined) from being covered by the laws linking time worked to compensation paid. This gives management a free hand, especially in the employers’ marketplace in which employees have been struggling for the past six years.

    At first,we asked ourselves: Why weren’t employers hiring when they’re expanding and making more money than ever? Simple. They didn’t have to. They found they could simply pile more and more work demand on the existing employees, the ones who had not been axed in the layoffs. These workaholic, unbalanced guys and girls were known to be reliable 60-80 hour-a-week people. These employees neither complained nor rebelled at this, because they felt incredibly thankful to have any job at all.

    You just sucked it and coped. For example, you never took sick days unless you were in hospital; you just came in and gave your cold or flu to everybody else, who never took sick days, either. You didn’t take your vacation days. Ever. You worked through Christmas-to-New-Year plant shutdowns. You were available and electronically on-call 24/7. None of this was ever TALKED ABOUT to HR or bosses or anybody else except your real friends—and you’d better be very, very certain you know who your “real friends” really are. It was just something that could be easily observed; you stepped out of line with this culture at your extreme peril.

    Having maxed out how much they could whip their existing people without risking putting them in hospital on a mandatory 72-hour hold, employers are now going increasingly to temporary agencies and independent contractors with ultra-low overhead. They can quickly bring in “generalist” or “job title” types on an as-needed basis and get rid of them just as quickly, should a project come to an end or things slow down a little.

    It was a cut-throat, dog-eat-dog world, and my still-employed friends tell me it continues to be. This is really the only employment world I’ve ever know. Nobody works 40 hours a week; if you do, and you are not a one-off, unique specialist with a must-have skillset, you’re gone. I was laid off during the recession and, at age 59, was never able even to be interviewed for a position in my field at ANY salary. Just too old, too expensive, too much health insurance use. Too much risk. I’m now one of that growing cadre of “independent consultants,” working remotely for my former employer at greatly reduced wages through an identity-concealing sub-contractor scheme, which I understand is de rigueur in Silicon Valley these days (in order to stay within the letter of the Sarbanes-Oxley law).

    It’s all incredibly cynical and—when you finally “get it” that the system is rigged against you, and there is nothing you can realistically do about it—it can also be emotionally devastating. Yes, age discrimination is alive and well in Silicon Valley—rampant, actually. Everyone there knows this. If you lose your job at 50 or older (unless you’re an upper-tier executive), your chance of finding another full-time job in your field at ANY salary approaches zero. And forget about having the feds help you file an age discrimination action against your former employer. Financially speaking, surviving drawn-out age discrimination litigation against a world-wide corporation with effectively unlimited funds is almost impossible. The amount of money the federal employment discrimination department can spend on your case is finite and limited by budget. On the other hand, the amount of money your former employer can throw at this train wreck is, for all practical purposes, limitless—and, as a result, they will win, and you will lose. In fact, you will very likely be financially ruined; if you are, it is unlikely that you will recover. Or, you may actually “win” a small out-of-court settlement, but it will not begin to cover the financial and emotional devastation this whole process will have taken on you.

    In my case, I knew I could demonstrate very convincingly, with documents subpoenaed from my former employer—documents I was shown very briefly, but was not allowed to take or copy—that they might have set up their case fraudulently, and that if so, it would not withstand full scrutiny in court. Nevertheless, I decided to take the severance payment and move on, to whatever extent I could. In the event… not much.

    So, you base exempt salaries on a 40-hour work week, and endeavor to keep it that way, even when workloads change? It sounds like fantasy to me… or Heaven… unless your industry happens to be in post-processing toxic industrial waste; inside-the-block maintenance of hot, degraded 50-year-old nuclear reactors; or… um, cleaning out sewers with your bare hands, maybe. Otherwise, it’s rather hard for me to imagine. :- Actually, though, I’m beginning to feel somewhat reinvigorated, just knowing that there are still companies and people like you left in the United States. I’m afraid, though, as usual, that California is setting the trend for the nation, and this will soon be the New Normal. If it isn’t already.

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