The compensation package you offer is the feature of your business that will attract better talent and retain good employees. When you are developing a compensation package, there are several strategies to remain competitive with similar companies.
1. Emphasize Retention
When developing compensation packages, most of the emphasis is placed on attracting the best new employees, but more of your efforts should focus on employee retention. If not, you can attract the most talented employees that will only look elsewhere for work within the next few years or less. Consider what makes employees stay with a specific company, even if the pay is higher elsewhere. For example, flexibility could be a deciding factor for employees. Although their pay may not be as high at your company, the flexibility regarding working from home and spending more time with family could easily negate pay differences. Another attractive feature to retain employees is benefits. A good benefits package, especially one including dental and vision, can be the deciding factor for many employees, especially those with families or who have been at your company for a while.
2. Avoid Relying On Bonus Compensation
It is common for some fields, especially those in high-demand or experiencing a shortage of employees, to utilize bonus compensation as a way to attract more employees. Although this strategy is good to increase your pool of applicants, it can cost you in the future. Sign-Up bonuses and similar forms of compensation are paid out after a predetermined amount of time of acceptable employment. If your company is not meeting the expectations of employees, you can expect many of them will quit after receiving their bonus. This trend of high employee turnover not only costs your company in lost productivity and money, but it also paints a poor picture of your company. It is best to keep these forms of compensation to a minimum and focus more on increasing wages and benefits, the forms of compensation that are more likely to help you retain employees.
3. Do Annual Compensation Checks
Each year, your company should assess how much you are paying employees and how it compares to other companies and current market trends. It is an attractive feature to work with a company that routinely considers what they pay and the benefits they offer against the cost of living or other changes in the market. During these checks, you should also make determinations about hiring versus wage increases for current employees. Some years you might decide you have excellent, productive employees who deserve a pay raise rather than utilizing those funds to hire new people that will require training and you have no guarantee they will stay for the long-haul.
Developing a good compensation package is not only about wages, but other incentives you can offer new and current employees. You should achieve a balance between attracting new hires and retaining current employees when considering compensation. Contact a company like Fox Lawson & Associates, A Division of Gallagher Benefit Services Inc. for more information and assistance.