How to Communicate Compensation to Improve Employee Engagement 

How to Communicate Compensation to Improve Employee Engagement 

Creating a compensation plan that rewards top employees is an excellent way to drive performance. It shows your most committed, dedicated team members that they are valued and appreciated, and that as long as their hard work and commitment continues, they will be fairly compensated. This is huge for driving ongoing engagement and boosting retention. Yet, there’s one caveat: first, you have to communicate your organization’s competitive comp plan to employees. Otherwise, they won’t know about it, and you’ll miss out on driving engagement, improving retention, and other benefits.

Utilizing compensation as a proactive engagement and retention tool is a great first step.  Once you have identified the key talent and built a systematic way to calculate employee compensation, we need to make sure they know about it!

Communicating 101: Never Assume Your Employees “Just Know” 

This seems a bit obvious: of course employees know what they are paid!

But, do they?  Most employees assume their compensation is comprised of simply their base pay, plus any additional bonus. They often forget – or perhaps are not told – that in many cases, 30 to 50 percent of their entire compensation plan is comprised of stock/equity, profit sharing, benefits, bonuses, PTO, etc.

Being able to effectively communicate the full value of employment is nearly as important to the strategy as the compensation itself.  In other words, it’s not enough to just pay them – we need to show them the money!  Below are a few ideas to help you do just that:

Employee Education – Dedicate time during the onboarding process (and perhaps even in the review process) to helping employees understand what and how they are paid.  This can be as simple as reviewing a comp statement, or showing them how to use an online employee portal.

Compensation Culture – If compensation is a key to retention and engagement, then let’s talk about it! Find ways to share your compensation strategy with the general employee population.  Make it something you are proud of, promote it, and be sure to explain the benefits.

Employment Branding – Incorporate your compensation strategy into your employment branding.  This would typically be messaging found on your career site where applicants are reading about the company.  Understanding how and why you pay can be an integral part of attracting (and retaining) the right talent for your organization.  Essentially, you are aligning them with your comp strategy before you even hire them!

Total Rewards Communication – Create (at a minimum) an annual total rewards statement that summarizes the total value of employment.  This can outline the direct or indirect value of many of the items shown in our list above, providing a more tangible value to their employment.  Even better, implement a total rewards portal that allows employees real-time online access to this data 24/7.  This is particularly helpful for those using a pay-for-performance model or for retaining employees with stock.

Compensation Management – Have a system in place that provides a clear and transparent process so employees can see how they are paid.  Make it easy on managers to extract compensation data for their staff to avoid confusion and frustration.  Quick and easy answers means more engaged employees.

These are just a few of the most effective strategies for communicating your organization’s comp plan to employees. For more detailed insights on effectively communicating compensation with employees, you can check out the HRsoft blog, where we share best practices and insights on this and many other HR topics, as well as strategic tips to make your busy day a little easier. You can also learn about COMPview, an HRsoft tool that simplifies and automates compensation planning process for busy HR departments in growing companies.


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