Stay Competitive with Total Compensation
As the current marketplace becomes increasingly competitive, it is imperative that organizations offer fair total rewards packages in order to attract and retain top talent. Employees who are satisfied with their pay, in addition to other factors, such as management opportunities, are less likely to look for work elsewhere. However, those who are dissatisfied or who feel undervalued will seek alternate employment. It is important that employers assess and even modify compensation structures on a regular basis to ensure they’re always offering competitive and meaningful packages to their employees.
When designing a total compensation program, it is important to take many factors into account, including the financial goals and objectives of the organization, the intrinsic and extrinsic drivers that motivate your specific workforce, your organization’s industry and size, and your geographic location.
Finally, you need to be aware of external and internal equity issues. There are many external tools that you can take advantage of, such as salary surveys, to determine if you are in line with the market. Using these tools in conjunction with your own internal equity monitoring processes can help you to determine appropriate salaries for your workforce, keeping in mind that cash compensation is only one component of your total rewards program. It is important to look at all of your organization’s compensation offerings to determine if you are providing a package that employees will view as competitive, motivational, and valuable.
What constitutes a total compensation package is different for every organization and can change depending on structure, business strategy, and overall culture. However, they tend to include the following components:
Cash compensation includes base salary and variable pay. It is important to ensure your salary ranges are in line with the market and consistent from an internal equity perspective. Variable pay includes any incentive and commission / bonus payments. Variable pay structures should be designed in such a way that they reward employees based on the performance or production expectations of their roles within the organization. It is important that employees make the connection between their positions and the variable pay they will receive for meeting and achieving these defined expectations. Although cash is generally the largest and most obvious form of compensation, it is only one piece of the total compensation package and should be looked at in aggregate with the rest of your organization’s rewards.
Benefits and income protection
The health and wellness of employees should be a top priority for employers, and it pays to invest in a competitive benefits package. Complete benefits packages generally include extended health and dental coverage, as well as income protection benefits, such as life insurance, accidental death and dismemberment insurance, critical illness coverage, as well as short- and long-term disability programs. Some organizations offer a flexible benefits program that allows employees the opportunity to customize their benefits package based on their personal needs.
Pension and RRSP
It is never too early to start putting money aside for retirement, and many employers recognize the value in giving their employees the opportunity to get a head start on retirement savings through company sponsored pension and RRSP plans. Contributions are generally set up through payroll deductions and the employer matches all or a portion of the employees’ own contributions.
In addition to the above compensation and benefits programs, employers often offer other more intangible forms of compensation, such as employee assistance programs, group home and auto insurance discount rates, education reimbursement programs, referral bonus programs, corporate gym rates, on-site daycare, competitive time-off policies, and flexible work schedules.
Once you have finalized the details of your total compensation package, it’s imperative that your programs are effectively and clearly communicated to all employees so that they are aware of the overall benefit of working for your organization. Staying on top of your total rewards offerings will ensure your employees feel motivated and valued, which will go a long way towards meeting your organization’s financial and employee retention goals.