How To Establish Pay Practices to Attract and Retain Employees
To attract and retain the best employees, Benefits Managers need to have a solid, competitive pay compensation strategy that brings in the best people
The most important employee benefit to all employees has to be pay compensation. Smart employers know that in order to attract and retain the best employees they have to offer and maintain a competitive salary structure as well as other employee benefits to create the ideal package. The total cost of an employee compensation package includes every single aspect of traditional employee benefits. This includes: health benefits, retirement benefits, bonuses and other non-salary based benefits. Studies have found that companies that pay a mix of salary and incentives are the ones that will have the highest morale and productivity in their workforce. The salary compensation is paid for the tasks that they perform and the incentives are for the motivation to complete the tasks and exceed their goals to increase overall earnings for the company.
Elements of an Effective Compensation Strategy
The budget that is allocated for compensation has to be used for both paid compensation and also to pay for other compensations such as employee benefits. This is why it is important to carefully establish what percentage will be used for pay and what percentage will be used for the remaining benefits. An example of a common split would be to spend 90% of the budget on salary and the remaining 10% would be used for benefits. The benefits portion would be split between health retirement, medical and other employee benefits.
One way to ensure that the budget is being spent in the smartest possible way is to develop a salary range for similar jobs in the same industry. Websites such as salary.com and payscale.com conduct research and are available to help determine average salary ranges in particular geographic and vocational areas that can be used by larger organizations to help decide their own salary ranges and smaller organizations can pay an outside vendor to help create a set of salary ranges that works for them.
It is very important to have regular salary audits to ensure that the salaries being offered are competitive and reflect changes that occur as the markets change. It is very important to stay competitive as failure to do so can result in a loss of valuable employees. It is also important to stay competitive within the industry that the organization exists. On a regular basis Benefits managers should determine what competitors are paying their employees and make adjustments to the companies pay compensation package. This can be done informally by talking to employees or formally by hiring an outside agency.
Employee Benefits Packages
Aside from pay compensation, employee benefits are another one of the most important factors for an employee who is considering accepting a position. The goal of any organization is to be competitive with health, retirement, tuition and any other benefits to attract the best employees. Organizations need to offer an attractive benefits package to go alongside the pay compensation that the employees will receive.
Performance Management System
An effective performance management system can help organizations monitor employees to ensure they are meeting corporate and personal objectives. Access 360 is one of the most common solutions in this field. It is important to conduct this performance management process in a structured manner that includes annual goals,appraisals and a process for coaching and mentoring employees. It is prudent for organizations to hand out pay raises to the employees who really deserve them and have tried hard to earn them. While it is also important that the incentive plan for employees in different locations is not different, it is important for organizations to adjust the salary package based on the geographic location of the organization.
An organization's paid compensation strategy is required to be compliant with federal and state laws. Things that the organization must consider include minimum wage, overtime pay and fair pay. According to federal law all employees must be paid at least the federal minimum wage for the work that they do. Full time employees should also be paid overtime at a rate of 1 ½ times of their hourly pay for any full hours worked over the 40 hour week.