When candidates apply for a job they generally dread seeing the three-letter acronym for pay on job requisitions, TBD. Employers, on the other hand, love being able to put this acronym because it creates a flexible environment where they can offer base pay based on experience alone if they’re not able to find the specific candidate they’re looking for. It’s clear that employers and employees think differently when it comes to offering any type of base pay.
In several recent surveys employees have said time and time again that pay is one of the major decisions in working for a company. To compete in what most are calling “the talent wars” it’s important to understand the needs and wants of your candidates, with base pay being a huge deciding factor in their employment choice.
There are three major points that companies are falling short on when it comes employees understanding and accepting their base pay.
Communication: Many companies don’t do a good job of explaining their pay programs. This disconnect affects not only your employees, but also potential candidates who want to work for your company.
Unclear pay-for-performance: For those who are paid through an incentive program many employees don’t understand the link between pay and performance. When companies hire employees with a smaller base pay to incite them through short-term incentive programs it’s important to have clear objectives and benchmarks when dealing with incentive programs. Business development roles rely heavily on making commission to raise their pay level and without clear direction they’re not going to stay at your company for very long.
Ineffective managers: One of the biggest disconnects between employees and base pay is managers not effectively explaining to them the incentive of their base pay plus performance pay. Could it mean that your managers actually need more training on communicating pay strategies to their employees?
Is your base pay falling short? Are you able to correctly identify different aspects in an employee to effectively raise their base pay and explain all the benefits that go along with their compensation plan? Companies need to be better at expressing and creating incentives for their employees in order to compete with companies who are going the extra mile with their compensation plans.
Learn how to get pay for performance strategies right with this informative primer: Strengthen the Link Between Pay and Performance