30 Dec Communicating a Compensation Plan to Your Employees
If you’ve developed a compensation plan that’s both competitive and equitable for your organization, your next step is to communicate the details of the plan to your employees.
In today’s competitive job markets, just paying your employees is no longer enough – we have to educate them. Yes, that means literally educating them on all the various components of their pay package rather than assuming they understand their offer letter or pay stub.
Compensation is a powerful tool for attracting and retaining top talent. Most employees assume their compensation is comprised of their base pay plus any additional bonus they may or may not receive. They often forget – or perhaps aren’t told – that almost 30 to 50 percent of their entire compensation is from other areas, such as:
- Profit sharing or 401k
- Retirement/pension plans
- Stock or equity
- Bonuses and incentives
- Rewards and recognition
- Personal time off and vacation
- Opportunity income, such as professional development programs, tuition reimbursement, etc.
So, part of your compensation strategy should be to “sell” the employee on their total compensation package. (Of course, it’s okay if you don’t want to look at it as “selling” – you can think of it more as communicating.) This step is absolutely crucial and shouldn’t be avoided, because if your organization fails to clearly articulate and explain in detail the total value of employment to your employees, you could wind up losing valuable talent unnecessarily.
Here are some simple ways you can integrate a compensation communication process into your strategy:
- Compensation Management – Have a system in place that provides a clear and transparent process so managers can easily extract compensation data for their staff. Quick and easy compensation answers means more engaged and happier employees.
- Total Rewards Communication – Create a total rewards statement that summarizes the total net value of employment. This can outline the direct or indirect value of many of the items shown in our list above, thereby providing a more tangible value to their employment. Better yet, 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.
- Walk Away Value – Create a tool (we call ours the WAVE calculator – Walk Away Value Estimator) that can show the potential lost value of employment if an employee leaves. This can include loss of future wage increases, bonuses, stock options, benefits and more.
While these methods are indeed effective for communicating your company’s compensation plan to your employees, they shouldn’t add more stress or responsibility for your already-busy managers. That’s why automated solutions, such as HRsoft’s COMPview system, are so beneficial. They keep all things compensation-related running smoothly without piling more onto the workload for you, HR, or other busy managers. To learn more about how COMPview works, feel free to view a short demo here.