As an employer, you’ve added all the perks, done the surveys, and tried to make the workplace culture more positive. Now it’s time to evaluate the compensation structure. How can your leadership team know whether what they are offering employees in terms of compensation is really competitive enough to retain your best talent for the long-term?
Compensation – the Reality as Seen by Employees
Many companies are doing what they can to improve work environments, raise employee morale, and provide decent compensation. The 2016 Payscale Compensation Best Practices report indicated that 81 percent of the world’s top performing companies were planning to hand out bonuses. Also, 78 percent of employers believe they are doing enough to demonstrate the value of their employees. But there seems to be a disconnect happening somewhere, because only 45 percent of employees we polled felt valued by their employer.The key to employee retention may be your compensation plan.Click To Tweet
Strategies for Creating a Strong Compensation Plan
It’s one thing to develop a compensation program; it’s another to create one that impresses employees enough so they stick around. In a candidate-driven market, compensation administrators are tasked with rolling out strong compensation plans that foster employee loyalty. Here are some general guidelines.
#1 – Start with what a fair wage looks like to employees
Employees will be shopping around at multiple stages in their career for a better salary and benefits package. Studies have shown that as much as one-third of the workforce is actively searching for other work opportunities while they are on the company clock. Take the time to understand what fair wages look like to employees and not just to the company budget. Start with a market study so you have a sense of how you stack up to your talent competitors.
#2 – Use a compensation program that’s adaptable
For the first time in history, there are five distinct generations in the workplace – each with their own unique compensation requirements. Younger generations are primarily concerned with making above-average earnings so they can pay down college debt and affordable benefits so they can enjoy healthy lifestyles. More seasoned employees are looking to maximize their retirement savings plans so they want progressive compensation and decent benefits. Make sure your compensation plan has something that appeals to everyone.
#3 – Consider a “market plus” salary policy
In order to remain competitive and retain your best talent, you may want to err on the side of offering slightly more. For example, offer the going market rate for the job, plus five percent more. At a time when employees are continually shopping the market for a new job, and using that as leverage to increase their salaries at home, this helps prevent employees from leaving their posts for just a few more dollars. Sweeten the compensation plan by providing extra perks like stock options, earned bonuses, flexible scheduling, and onsite benefits that no other companies can offer.
As you develop a solid strategy, keep in mind that certain factors such as industry changes, labor market updates, and organizational growing pains will require a new look at how employees are being compensated. Use the most up-to-date salary data for your region and by job types for a comprehensive study of your comp plans.