Is your compensation package aligned with the goals of your firm to attract and retain a winning team? The impact to your bottom line due to employee loss is costly. Firms with mediocre compensation plans are likely to have high turnover rates and lose qualified job candidates.
Most business owners are in denial about what employees want and what it takes to retain them. A study by MetLife found employee loyalty has dropped steadily since 2008, but employers mistakenly believe it’s on the rise. Incorporate fundamental components into your compensation package to enhance moral, performance, and employee retention.
Today’s leading employees expect a comprehensive benefit package. Employees associate their value by how you compensate them. A quality compensation package will benefit your firm with increased employee productivity and loyalty; enabling the team to focus on firm goals.
Take a look at what employees really want in a compensation package:
Base Salary: Provide a base salary along with a structure of ranges. Employees want and need something to strive toward. If they can’t visualize “moving-up” and advancing in the firm, chances are they will find another place where they can excel. No one wants to be in a dead-end career.
Bonuses: Bonus dollars based on performance are a great incentive to increase productivity. Set goals that are measurable and attainable, yet stretch employees to develop and reach new heights. Performance based bonuses should not be a personal competition amongst team members. Utilize bonuses individually or as an entire group effort.
PTO: (Paid Time Off) Everyone needs time away. Employees who are not given sufficient time away from the office resort to lower productivity levels and burn-out. Many firms are choosing to offer a Paid Time Off program or PTO. PTO is a flexible arrangement that gives employees a set amount of days off to be used at their discretion for vacation, sick leave, personal days, etc.
Health and Wellness: Providing a health and wellness package will aid your firm in attracting and retaining qualified and loyal employees. A total health and wellness package should include health insurance with dental and vision benefits, long and short-term disability and life insurance. Some firms have added additional perks by offering wellness training or gym memberships. If you aren’t interested in providing the whole enchilada, many employees will pay for a portion of their benefits, rather than not have them at all.
401(k) or Other Retirement Plans: Employers are in the dark when it comes to determining what benefits are key drivers to employee loyalty. The study by MetLife revealed more than half (52%) of employees named retirement benefits as a vital payback. Financial insecurity has become more widespread, therefore, employees are looking for ways to plan and enhance their retirement years. Retirement plans give employees a compelling reason to remain loyal.
Flexibility: Offer some flexibility and your employees may be willing to give up some of the other “perks”. Telecommuting popularity is on the rise. Working from home has never been easier with the growth of mobile technology. Employees, particularly those raising families, are in desperate need of flexibility. Place trust in your employee and provide flexibility. The tradeoff could benefit your bottom line with reduced costs of “housing” another employee along with increased productivity from your telecommuter.
Your firm’s compensation program will need continual reinforcement. Communication is vital between managers and employees to keep your compensation strategy alive. Plan frequent reviews of your firm’s compensation plan as well as frequent communication with each team member. Talk openly and honestly. Encourage feedback and be willing to make changes.
Let us know what questions you have about strategic planning, business development, operational effectiveness, the human element at your firm, or whatever is on your mind! Leave us a comment or email the Ironstone team.
Resources: Metlife Small Business Study