Organizations want to hire the best employees to take care of their business. A successful business must always hire and retain top talent. In an effort to hire top talent, businesses always put up a firefight with competitors in terms of compensation.
But in today’s scenario, compensation doesn’t just involve good pay for your employee. You also need to offer them incentives and other work options if you need employees to stick within the organization.
Here are four questions you need to ask yourself to make the most out of your compensation budget. These questions will help you determine where you are going wrong and how you can improve on it.
1) Do you have a compensation policy in place?
You need to go into your hiring policies and check if you have a compensation policy in place. In general, 9 out of 10 companies have a compensation philosophy for their employees. But, a staggering 50 percentage of employees don’t understand this philosophy. This contributes to a lot of misunderstanding about how salary and other perks are calculated.
When confusion sets in, employees might feel that they are not rewarded for their contributions as expected. They might feel dejected and this can cause a lower morale in the workforce.
What can you do?
You can set up a solid compensation strategy that governs how the salary and other perks are paid. You should also create rules that determine how the compensation structure works in your organization.
Here are some examples:
- How will overtime requests be processed?
- Who will track the performance of every individual employee?
- How will each employee’s performance be measured?
- Who makes the decisions when it comes to altering compensation for each employee?
You can ask any number of questions but the goal is that you need to create a solid compensation policy and write it down.
2) Do you communicate your strategies with your employees?
Now that you have created a solid compensation strategy for your business, the next step is to let your employees know about it.
One of the biggest mistakes that organizations make is not educating managers and employees about their compensation strategies. You need to let them know about your rules and regulations.
A very good compensation strategy must also include a communication plan that helps managers and employees understand it. Here are some tips to help you communicate your strategies to your employees.
- Make a clear explanation of buzzwords like salary ranges, compa ratio and other jargons
- How budgeting works in the organization
- Who makes the final decisions on compensation structure
- How the final decision for employee compensation is made?
In essence, it does not matter if you have a laid out compensation structure. You also need to educate your employees about how the structure works.
3) Do you give anything outside salary benefits?
Most of your employees work in your organization for more than just their salary. Some of them work in your organization for the perks that are offered, while some work for the flexible work hours.
While there is an inherent need to offer more salary, you can always think of creative ways to retain employees. Here are some ideas:
Offer them a flexible work placement
After COVID-19, most of the employees have been forced to work from home. This has caused a major shift in how employees work in organizations.
Above salary most of them seek a flexible work arrangement, which allows them to work from the comfort of their house. You can offer your employees to work from their home whenever possible.
Offer paid leaves for vacations
If you have some employees who are fond of travel, you can offer paid leaves to help them go on vacations. This will help them maintain a healthy work-life balance in your organization.
Create team experiences
Team experiences is something organizations have been doing for a long time now. They hold events and competitions within individual departments. You can hold team games, sports meets and fancy dinners to create team experiences for your employees.
Give them opportunities to learn and develop
Employees always appreciate it when you are ready to invest in their education. Allow them to attend conferences, online events in the industry. You can also sponsor for their certification courses and incentivize them for it.
When you allow your employee to take time for their development, two things happen
- Your workforce become better at what they do and this translates to a better profit margin for your business.
- Your employees stick with you longer, because you are willing to help them with their continual education.
Even if an employee leaves you after learning, they will always appreciate the positive attitude of your organization. In short, it’s a win win either way.
4) Do you take industry benchmarks into consideration?
Comparing yourself with the competitors in your industry is a really good place to evaluate your compensation policy.
Factors like roles, responsibilities, size of the company and geographical location must all be taken into consideration. These factors will help you, how compensation policies and structures work in your industry. After you have done benchmarking, you can move on to set the salary standards for your organization.
If possible you can also conduct quarterly salary audits to understand how the compensation for each role in the market is changing. These audits will help you understand how you need to allocate your compensation to spend effectively.
With a tool like Compport, you’ll be able to analyze your compensation policy and make sure that it’s efficient and fair. Take Compport for a spin today.