Just incase I drew you in with my clever use of a George Harrison lyric, you can read the first 2 blog posts in this series here & here. This week we are going to look at Compensation & Benefits * queue a chorus of groans from all the bean counters out there *
According to a recent Employment Hero report 63% of employees say that remuneration is one of the top 3 considerations when selecting a new role. But it is not the make-or-break factor it once was, when it comes attraction and retention of employees additional benefits such as flexible work arrangements, training & development, salary sacrifice, reward programs & perks such as free snacks (š·) go a long way to singling your business out as an employer of choice.
How an organisation pays and rewards its people has a big impact on its ability to attract the best talent, ensure that they are challenged and motivated and whether or not they will stay with your organisation. One of the first steps in making this happen is to develop a remuneration strategy. The objective of a remuneration strategy is to support the overall organisation strategy, the HR strategy and the desired organisational culture.
A successful compensation & benefits strategy will ensure that you are able to recruit the right people, with the right mix of skills, to ensure that your organisation can meet its business outcomes. To be effective, the strategy needs to consider the internal relativities between roles; the organisational needs & values and the external market.
Without an experienced HR professional in place to create a strategy SME’s can struggle with not only putting together a total compensation package, but, benchmarking a base salary that is competitive in the current market. The most fundamental stage in the overall management of remuneration is to ascertain what is an appropriate rate or amount to pay employees, and to ensure that this process is fair and objective whilst taking into account factors such as the industrial instrument, market availability of the relevant skill set, fairness & objectivity and whether the organisation links pay to performance.
The organisationās structure, the market in which it operates, the culture, its position in the organisationās life cycle and taxation to mention a few areas all impact on the strategy for the organisation. For example; a charity is unlikely to have a strategy with a high base salary, instead offering a base salary in the 25th – 50th percentile range in-conjunction with FBT free salary sacrifice arrangements or other benefits it can offer for free or at very low cost for the organisation.
Organisations also need to consider where they want to position themselves in the salary market ā does your organisation want to be highly competitive? or rather, does your organisation want to be in the medium range of the market, but able to offer other non-monetary benefits such as working from home or flexible start / finish times? Where you position yourself can depend on both internal and external factors. For example:
- capacity to pay high salaries
- demand for, and scarcity of, skills now and in the future
- competitors; and
- other pressures e.g. turnover, difficulty in attracting talent etc.
On that note, organisations are only as successful as their approach to hiring the right people, setting clear expectations, managing performance and recognising and rewarding employees for a job well done. If you would like a compensation & benefits strategy to tailored to your specific business needs contact Simone today.
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