No business is built by one person. You know that it is your team working together that is making your company successful.
While we know that you praise your team, it’s also important to consider how you are compensating them. In this article, we will give a primer on your compensation strategy and red flags to watch for that may indicate that it could use an update.
Why do I need a compensation strategy?
It simply isn’t enough to offer competitive salaries and benefits; you need a clear and well-thought-out compensation strategy. A written strategy keeps your employees motivated, allows for growth within a role and ensures fairness between positions. It also helps you to be able to comply with legislation, such as the Pay Equity Act.
Your compensation strategy should align with your company’s overall corporate objectives, as well as accomplish two goals: incentivize top talent to stay (and succeed) within the organization and attract qualified new hires.
Is it time to review my compensation strategy?
If you have a compensation strategy, you may be wondering when to review and adjust it. The answer: it depends (which is why it’s always wise to talk to someone well-versed in the subject.)
However, there are some indications that it’s time for a review:
- Has there been a shift in your industry that has affected how you and your competitors approach compensation?
- Are you having difficulty hiring new employees? Are qualified candidates going elsewhere?
- Are your employees generally disgruntled? Are they leaving or looking for other work?
- Do you conduct exit interviews? If so, has compensation come up during these conversations?
If you answered yes to any of the above questions, it is possible that your compensation strategy may need to be reviewed.
How do I create a compensation strategy?
Creating a comprehensive compensation strategy requires careful research and planning.
Before you begin, take the time to review your status quo. Take a look at your current compensation practices and consider how they align with your overall business objectives. Don’t forget: compensation is more than just a salary; it encompasses all forms of payment and benefits you provide your employees.
Next, find out how you compare. Assess the external market for comparable positions in order to set competitive salaries and benefits.
By that, we do not mean looking at websites such as Glassdoor or Indeed. These sites report figures which are compiled using data that is self-reported and cannot provide you with accurate insight into the job market. Human nature is such that we will often overstate what we are paid, so you could be making important business decisions based on faulty data.
Instead, consult a compensation specialist at Brown Consulting Group. We have access to clear-cut, objective industry- and location-specific data that you can use to make sure your compensation structures are in line with the current market.
Finally, you’ll want to create an organized compensation strategy document so everyone involved is on the same page about the company’s compensation policies.
Compensation and the Overall Financial Landscape
Of course, we know that your compensation strategy can be a touchy subject, especially during a recession. It can be hard to adjust compensation in an uncertain market when you have competing priorities when it comes to your budget.
If that is you, ask yourself, what is this job worth? How does it move my business forward? What is the cost of not having this role filled? If it is a job that is currently filled, keep in mind that the cost to replace an employee is costly – both in time wasted, lost productivity and the financial costs associated with re-hiring (e.g., advertising, interviews, training).
Turn to the experts at Brown Consulting Group for your compensation strategy
Developing and amending your compensation strategy can be overwhelming. There are several questions that need to be answered, such as:
- Am I paying my employees a competitive wage?
- Are there any benefits I should consider offering?
- How do I roll out any compensation changes?
Fortunately, you don’t have to go it alone. The team of compensation experts at Brown Consulting Group can help. We are here to provide you with the insights and resources to create competitive yet equitable pay packages.
As your HR business partner, we never provide a one-size-fits-all approach. Rather, we get to know your business, your values and your goals so that we can identify if your compensation needs a tune-up. If so, we will create an effective compensation strategy that aligns with your business. Contact us today to learn more about how we can help you.