As we go about trying to recruit the best talent for our companies, we’re often faced trying to create a compensation package that is competitive. But, a compensation program needs be designed to both attract the best talent, and to retain them down the road.
Having a plan in place for your compensation strategy is important to aligning your recruitment and retention efforts. Many business owners are surprised that a compensation strategy is much more than merely assigning a new employee salary for each position in the company.
The compensation strategy should include:
Statements about how employees are viewed as parts of the company. This is more of a philosophical construction that new employees can read to understand how employees are seen by leaderships. It should definitely be influenced by the company culture.
Real market analysis about average starting salaries for critical and most frequently hired positions in your company.
Include guidance for the mixes of base salary and incentive pay, as well as non-cash awards and benefits.
What the goals of the compensation strategy are. For example, is may make complete business sense to aim to avoid paying premium rates for the top candidates, when average candidates will service your company’s business needs.
It should address the value of internal equity. When an employee has been with you for ten years, are they really worth more? Maybe, maybe not. It depends on their position and your company.
As the business owner, you are the one that is most in position to set the tone for creating the compensation strategy. Letting your views be known will allow your staff to be more honest in the follow-up conversations. Don’t let them lock into hiring the most expense candidates with the most experience, if that’s not what is best for the business goals. If you only need an average maintenance person, then hire an average maintenance person. If you have a low turnover rate, then focus the compensation program on turning candidates into employees, and then let the other retention aspects of the business workplace take over. This may mean helping the candidate with a relocation in lieu of promising a high salary.
Modern Business Associates is an HR company that focuses on payroll and HR outsourcing. We routinely work with clients on benefits and HR management. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.
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