The overarching objective behind your organization’s compensation management process is to pay your employees fairly without exceeding its budget. Yet, beyond this primary goal lie important pillars, each of which must be satisfied to achieve better bottom-line results for your company.
Explore these critical elements below.
One of the primary purposes of paying competitively is to help your company win the talent wars and attract qualified employees. And, according to research, the majority of candidates want to hear about salary first when they’re working with recruiters. Yet, base pay is only one part of the equation, and total rewards can go a long way in drawing in-demand talent to your organization. Bonuses, merit pay, stock options, travel allowances, and benefits should all be part of your recruitment strategy within your overall compensation plan.
The next but equally important aspect of your compensation management process entails determining how your organization can pay its existing workforce strategically to drive commitment. Current figures suggest that raises hover around 3%, and employees often leave in pursuit of a significant pay increase. Thus, failure to pay competitively can lead to turnover, but it’s equally important to ensure you’re paying fairly within your own organization, too. When top performers see other employees who produce far less work getting paid the same amount, it can cause demotivation, which brings us to our next point.
Your compensation program can be used to strategically drive motivation within the workforce. A well-structured plan can give employees a tangible idea of the rewards they can expect to receive if they meet certain goals. Of course, these rewards don’t have to only encompass hard-dollar bonuses. Employees are increasingly seeking non-monetary perks like flexible work schedules, volunteer opportunities, and the ability to learn new skills. Providing some of these nontraditional incentives may help to spur motivation among your teams, even when the budget doesn’t allow for financial incentives.
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.