Think your employees are happy with their compensation packages? Think again: 60 percent of employees who think they’re underpaid intend to leave their job.
Many of us say we’re not motivated by money but, when it comes down to it, compensation plans (not necessarily base salary though) are still near the top of the list as a reason why most people take or leave jobs. There are also a number of issues surrounding pay that any company has to navigate smoothly: including discrimination based on gender or race, inequality between co-workers on the same level.
However, providing an attractive compensation package is crucial in attracting top talent and in retaining these employees.
Here we explain how you can create compensation plans that aren’t terrible and will help you attract and retain the top talent.
Overhaul performance management
We’ve said it time, and time, and time again at GetApp: traditional yearly box-ticking performance reviews don’t work – they’re dead. Your employees want more informal, continuous feedback instead of annual goals, and they want training and personal improvement plans.
They also want recognition in different ways: not just monetary, but also social recognition from management and their peers. When building your compensation packages, make sure that you have the tools to be able to deliver this recognition.
Next action: take a look at your HR software to see what performance management functionality it includes and how you can use it.
Rethink culture and perks
You may not equate compensation with company culture, but the two go hand-in-hand. When you think of compensation packages, you need to think of every aspect of day-to-day office life that you offer your employees.
This doesn’t necessarily mean ping pong tables and Nespresso machines (although if that’s what your staff want: go for it), but also working hours, dress code, telecommuting, and even aspects such as wellness. Make these aspects part of your compensation packages if you want to ensure that your employees are happy at work.
Next action: Get suggestions from your employees as to how you can build a company culture (if you don’t have one already). Once you’ve done that, check in with them regularly to find out how they (and you) are doing.
It’s not just working hours that employees want flexibility in. If you want to attract and retain top talent, you’ll want to consider flexible pay. This means allowing employees to choose the way their pay is structured – maybe one employee wants more base and less bonus, or another wants perks such as meal vouchers and a transport subsidy.
Next action: The key here isn’t to guess what your staff might want, but to ask them (anonymously even) through an employee feedback or engagement form.
Take regulations into account
It might sound obvious, but you need to keep an eye on your compliance, and the ever-changing world of regulations. With a new US government administration in place, regulations surrounding pay are up in the air. The effect of Trump on HR processes and legislation is still unclear, but the debacle over issues such as healthcare (including parental leave) are still prevalent.
For example, the new overtime rule may or may not be passed, but you still need to be prepared if you want to stay within the law.
Next action: If you have a comprehensive HR solution then that software vendor should be able to ensure you are compliant, or add modules where necessary to cover new legislation. This is where regular contact and a good relationship with your software vendor is key to ensure the channels of conversation are open.
Communication is key when it comes to salary. If you’ve got a compensation strategy, then you have to ensure your employees know what it is and where they can find more information on it. A WorldatWork study sponsored by Aon Hewitt found that 53 percent of companies said that most employees don’t understand their compensation philosophy.
If your employees perceive that they are being underpaid, they are much more likely to leave. That sounds like an obvious statement, but if you explain to your staff why they are receiving a certain compensation plan – and publish data of worker compensation plans – then you’ll have a much easier job of retaining talent. The data backs this up: 82 percent of employees are ok with low pay if the rationale is explained.
Next action: There are several ways to be transparent using communication solutions. This could be through a staff intranet, regular company meetings, or collaboration solutions such as Slack.
How compensation management software can help
If you want to transform your compensation plans, then software can help.
Bob Laurenzo, CEO of compensation management solution Decusoft, explains: “The right compensation management software solution is essential to attracting and retaining the best talent. Most organizations are still using spreadsheets to administer their compensation programs. According to Ventana Research, 34 percent of organizations said they find major data errors in the most important spreadsheets they use. A further 18 percent said they find major errors in formulas.”
He adds: “Some firms are reluctant to champion automation because they believe it’s expensive. In fact, the opposite is true. The cost and time savings an organization may realize from using compensation software can be extensive. Using a secure, web-based compensation software, instead of spreadsheets, to manage total compensation reduces errors, improves security and saves organizations of all sizes time and money.”
Other leading compensation management solutions include:
Software that includes compensation management functionality include:
- Halogen TalentSpace: a performance and talent management solution
- Dayforce HCM: a HR solution that combines workforce management, recruiting, performance management, time and attendance, benefits administration, and compensation management
- Oracle HCM Cloud: human capital management software that includes payroll, benefits, talent management, and compensation management functionality
- FocalReview: a compensation and performance management solution.
How can your business create a better compensation package?
If you have any tips on how to create a compensation plan that works, let us know in the comments below or by emailing me at firstname.lastname@example.org
If you’re ready to purchase compensation management software, check out independent reviews of these solutions.