Largely because the ongoing pandemic has turned so many business models on its head, particularly when it comes to staffing, employees are gaining more of an upper hand when it comes to figuring out where they want to work.
In that light, here’s what you need to know about implementing meaningful compensation strategies.
Employee expectations are up, and they necessitate a positive reaction from employers who wish to be able to recruit and retain talent and ultimately remain competitive. But the approach must be strategic, rather than haphazard, if it’s to be effective.
Steps for Creating a Compensation Strategy
Because costs are a major expense for organizations, you must take a measured and well-planned approach to strategic compensation.
- Get employee feedback. You need to learn what your staffers think about total compensation and what they most value. Seeking input will give you the data you need to satisfy most employees.
- Find out what rivals are offering. You know that pay and benefits play a big role in recruitment, so it’s important for you to know what’s in their packages. Even if you can’t match everything offered, you might be able to come up with some things that can give you an edge.
- Go over your budgets. Take a clear-eyed look at your operational and HR budgets to determine how much can go toward anyone staffer. You need to consider all expenses plus plans for performance or merit pay hikes.
- Don’t forget rewards. You want to build in total employee compensation to motivate and keep employees. Consider extra vacation days for some employees or even stock options. If you need help with ideas, consider signing on with a consultant.
- Figure out pay grades. You need to do this, based on positions and responsibilities, to create a compensation framework. This will help you determine how much you can pay for each position and let employees know what the range is for their role.
- Get up to speed on compliance. Compensation strategy is important, of course, but implementation and provision are regulated by the Fair Labor Standards Act. Some states also have compensation-related regs. You’ll need to work closely with your legal team to make sure you’re in compliance and that your strategy meets requirements.
- Inform staffers. Communication is key. To avoid unnecessary issues, make sure your employees have all their questions answered regarding total compensation, and that they know what to expect. Use the opportunity to highlight aspects of which you’re particularly proud.
- Be practical. Running the numbers and realizing you can’t give everyone the proverbial kitchen sink underscores the need for a strategic approach to compensation. Above all, be upfront about what’s possible and what isn’t. You can’t offer everything, but you can be creative. For example, built-in benefits can include flextime, company-paid transportation, or access to workplace services.
Now that you understand that implementing meaningful compensation strategies takes serious planning, you can now commence to taking the steps necessary to pull it off to remain competitive. Know that a clear and well-defined compensation approach will, at length, foment a trusting and transparent work environment that will result in more satisfied employees. Such satisfaction will spill over to customers, leading to business growth and a better bottom line.