05 Nov 3 Things HR Compensation Professionals Need to Know About Employee Pay
Compensation is the way in which you reward employees in exchange for their services. Not only is it the foundation of a productive workforce; it can also be used to encourage positive employee behaviors that align with your organization’s overarching goals and strategy. It is therefore essential for HR compensation teams to ensure they’re paying people right.
In fact, the ways in which compensation impacts employee performance are almost beyond measure. While each corporate culture and workforce is different from the next, here are some examples of how a well-designed and effectively communicated compensation package can drive specific organizational outcomes:
- Goal Achievement: Simplicity and clarity can also go a long way to support achievement of goals. Compensation plans should be easy to understand – in other words, the simpler bonuses and incentives are, the better your employees will be able to understand what is expected of them and how to achieve it.
- Better Retention: A compelling future and opportunities for professional development are key qualities employees look for when seeking long-term employment. Yet, it’s an undeniable truth that financial rewards also play a role in retention. If your top performers believe they could be better rewarded for their contributions elsewhere, they’ll be more likely to leave.
- Workforce Motivation: Pay-for-performance models can be used as a source of motivation among employees. In addition to hard-dollar rewards, more organizations are getting creative with incentives such as vacations, gift cards, and other motivators to keep their employees focused on contributing their best possible efforts.
While designing your pay plan with your employees’ wants and needs in mind is essential, it’s also critical to communicate total rewards effectively, too. More than a third of employees (35%) are unsure exactly how their pay is determined. Transparency into your pay philosophy is important for supporting fairness and consistency, so be sure to give managers the tools they need to hold accurate and thoughtful conversations with their direct reports on employee pay.
HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.