At both small businesses and large companies, employee compensation should always be top of mind. It’s crucial that organizations offer workers the best pay packages possible, since this can help with recruitment and retention as well as ensure that morale stays high.
Therefore, it’s important for companies to regularly evaluate compensation packages (to determine the best fit) and educate employees on their value. In this article, we’ll explain how organizations can know they’re offering salaries and benefits that are attractive to prospective team members—and fair to current ones—and adequately inform the workforce about offerings.
Evaluating Employee Compensation Packages
You probably already know about salary surveys. They are a great place to start—but they have many weaknesses for small businesses. For instance, how many hats do you currently wear? How many hats do your colleagues wear? You can look up the average compensation for an “office manager” in your area and your size of business, but there can be tremendous variation. So, make sure you’re looking at actual duties, not just what you would expect from the job title.
Remember, pay is not the only part of compensation, so strive for a holistic view. Your insurance benefits (health, dental and vision), vacation packages and any other perks offered are all considered compensation. Additionally, if any of your employees use a company vehicle, you may be able to factor that into their total compensation.
Educating Your Fellow Employees
When your company is making a job offer, people often look just at the salary. Ensure that your offer clearly explains the other benefits and perks included. For instance, three weeks of vacation is a lot better than two—and a health insurance plan that meets the needs of your prospective employees (at a good price) is often very attractive to many.
So, spell everything out. Your company should make it clear to employees what the entire compensation package contains. And don’t just consider this when hiring someone; the information should be provided on an annual basis. You don’t want your best team members to leave your organization in search of a higher salary because they didn’t take all of their benefits into consideration.
Keeping Everything Fair
The unemployment rate is currently at an all-time low—meaning you might have to pay a bit more to get people to work for you. That’s fine; that’s how the free market is supposed to work! But, if you have to pay a new employee 5 percent more than their replacement, make sure you bump up your current employees’ pay as well.
Yes, that might be expensive. But if you don’t, you risk your long-time employees feeling undervalued.
You can also run into problems if similarly situated employees of different ethnicities or genders are being paid significantly different amounts. Keep yourself out of legal trouble by keeping salaries fair and accurate for everyone. Remember that employees are legally entitled to discuss their salaries with each other, so anything that is unfair likely won’t fly under the radar for too long.
Compensation requires a lot of conversations and research. In order to attract quality employees, salaries should be at—or above—market rates and benefits should be the best they can possibly be. It may seem expensive, but turnover is more costly and poor performers can damage your business. So, it’s a good idea to always keep an eye on employee compensation.
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