How to Create a Win/Win Compensation Strategy
2 Min Read
Salaries within the workplace are no longer a secret. The mantra of “never discuss your salary with a co-worker” was blown apart last year when a Google employee created a Twitter spreadsheet asking people what they made at the company. About 2,800 workers divulged their salary, which went viral on Twitter. As you might expect, many thought what they were earning was too low.1
So how can you as a human-resource professional make sure your company’s compensation strategy is a win/win for your company and its employees? Here are five suggestions.
Know the Marketplace
First, look at your industry to check that your pay scale, base pay, commissions, bonuses, and non-monetary compensation are in line with your company’s competitors. Ask interviewees what it is they didn’t like about their former job’s compensation package. Finally, make notes from exit interviews about your own employees’ views on compensation, knowing that 34 percent of employees move on because they are unhappy with compensation benefits.2
Create Some Certainty
A study by Mercer, an HR consulting firm, found that when employees are well informed about the pay-setting process, they feel more satisfied, even if they don’t agree with the amount of a pay increase or with the time structure. When employees know there is a written process to which they have access, they will be more engaged during, and more satisfied with, their salary reviews.
Performance Goals, Compensation Incentives
A great compensation strategy typically includes rewards based on performance. This could be commission-based bonuses that depend on sales or productivity. The plan should be easily understood by and attainable for top employees. A system that’s not written down, is too complex, or is not attainable won’t inspire employees to strive to be their best and will be all but ignored.4
Strategic Pay Increases
Gone are the days when employees receive pay increases simply for showing up (cost- of-living adjustments). Being more strategic and linking pay to performance creates a culture in which employees strive to contribute not only to the success of the company but to the size of their paychecks. Research shows plans that are easy to understand, large enough to justify the effort, and attainable are the best received.5
When you find out what non-monetary compensation motivates your employees and then leverage it, everyone wins. Whether vacation time, work/life balance schedules, liberal work-from-home policies, company perks, special outings, or any combination, you can effectively recruit and retain employees based in part on first-rate non-monetary compensation.
Those who are interested in learning more about the HR industry ─ perhaps pursuing it as a career ─ should inquire about The University of Scranton’s online Master of Science in Human Resources Management program. Visit our website elearning.scranton.edu or call (866) 373-9547 for more information.