Patty McCord, HR consultant and executive, mentioned in her TED Talk, “8 lessons on building a company people enjoy working for” that “The job of management isn’t to control people, t’s to build great teams”. And we like to think that this isn’t necessary management’s problem, but HR’s – who, in fact, is the “soul” department of a company. And how can you ensure you are building a long-lasting team if not by providing them with compensation and benefits?
When contemplating ar the idea of compensation and benefits, it’s true – the thought would make anybody’s eyes sparkle. Who wouldn’t like something extra at the end of the month after all the bills are paid? However, as much as the idea would make everyone content, lately, as the millennials entered and partly took over the workforce, the benefits are not expected in terms of finance, only.
But then again, every company should have a compensation and benefits strategy available. With the rise of startup culture, each business should stay competitive on the market to attract top talent. But how can you create an almost infallible strategy?
First, you need to know the company’s overall strategy – if it focuses on growth, expansion, new product development. And second, and highly important: who do you want to attract to work for you? In spite of all jokes that appeared on the Internet, millennials and Generation Z do have different work values than Generation X and Baby Boomers.
After you have the answer for these questions, you can go further and outline a strategy. Here are some keys you can take into account.
The Total Rewards Model, coined by World at Work mentions that rewards are composed of two elements – direct and indirect compensation. But we shall take them apart and categorize them into compensation and benefits.
Direct compensation consists of salary and other variable pays for work, while direct benefits could mean either monetary ones or private healthcare, retirement pay and others. However, indirect compensation and benefits could mean work-life balance, recognition, professional development.
It’s important to know what your employees want and what would make them stay and not contemplate if “the grass is greener on the other side”.
What you need to take into account is that if you have a wider age range between your employees, it’s important to know that maybe the older ones are more concerned about retiring and healthcare benefits, while the younger ones would be more interested to have the possibility to develop professionally.
However, it’s better to ask and not to assume. Therefore, take your time to talk with your employees and see what they need. It would be a pity and a waste of budget to offer them a plethora of benefits they won’t use. Moreover, have a look n what your competitors are offering. Although most people would like to earn as much as possible, for a good compensation and benefits package they might sacrifice a bit of their pay rate.
Look over the company’s overall budget and see how much of it can be allotted for compensations and benefits. Ethically speaking, all working employees should have access to the benefits and a fair shot to compensation, whether financial or not, because, from a technical point of view, they valuable employees pay for themselves in work efficiency.
However, there’s always the option to include a timeline for an employee to have access to some of the benefits – for instance, they have to stay a specific time in the company.
After you made a budget simulation and concluded the right amount that can be invested, it’s time to go to the next step.
In case the compensation and benefits are new in the company, first thing first you need to update the employee’s handbook. Normally, you don’t have to add specific numbers for compensation, yet all the rules need to be transparent and to be easily accessed by everyone in the company.
It’s important to state everything in detail, from the number of vacation days to how the overtime will be rewarded. List all the benefits package and if they have eligibility rules, list them as well.
Ensure that every employee is made aware of them, including new employees. Having a clear outline of the compensation and benefits might make your employees be more focused on achieving them.
Now, it’s possible that there might be cases where you will need to be more flexible and creative regarding the benefits and compensation, especially the former. Maybe you will have incredibly hard-working employees who are compensated for their work but are not interested in any of the provided benefits. In case this happens and you want to ensure that they know how valuable they are for the company, you can have a one on one talk and offer them a more flexible work schedule, in case they are a parent or are continuing their studies or something else. The whole idea of this strategy is to motivate employees.
We won’t say that these are the only steps you need to take in order to keep your employees happy and to build great teams – but it’s a start.
If you want to go further and learn how to draft a compensation and benefits strategy that suits your company’s culture, learn how to attract and retain top talent, how to implement several HR strategies and more, we highly recommend you to join our course – HR Management Essentials. All the information that will be presented is actual, distilled and transformed in such ways to be applicable in real life. See you there!