Going out and chucking money at people to come work for you, no matter how tempting it may be to secure their employment, is fraught with devaluing the efforts of others and creating a poor workplace culture.
Employees evaluate their pay, and the fairness of their pay, relative to other employees in the organisation. Employees measure the ratio of their total compensation & benefits (salary, bonus’, flexibility, working conditions) to their effort, ability and experience at work, and then compare it to others.
If there’s a perceived inequity employees can usually be depended upon to act in ways in which they believe restores equity. Such as:
- Reducing their output at work such as not working as hard, not contributing to discussions, going through the motions and doing the bare minimum
- Increasing their “compensation” ie: theft. Research was conducted in several manufacturing businesses who had to temporarily reduce pays by 15%, it found the incident of theft amongst the workforce doubled during this time.
- An increase in dysfunctional behaviours such as high turnover, frequent absences and and unwillingness to work as part of a team.
When looking at creating an effective compensation and benefits strategy you are looking at being competitive to what is happening externally and achieving parity internally to ensure you are achieving the right outcomes from your strategy, as well as ensuring it aligns with your strategic and operational goals.
Last year I wrote this blog on compensation strategies. An effective strategy should allow your business to remain competitive in the labour market to attract a high calibre of talent while maintaining controls on the upper salary limits, encourage and reward high performers and reduce turnover.
Within the mining industry many of the big miners subscribe to the MacDonald report which benchmarks salaries across the mining industry. Hay’s recruiting has a similar report for download, though it lacks the depth of qualitative information that the MacDonald report includes.
Other ways of collecting data on industry rates of pay is to ask peoples expectations and current rates of pay at interview, conduct exit interviews to gain an insight on the employees decision to leave your employment and request feedback on your pay and benefits, trawl seek with the salary filters on to see the pay ranges your competitors have set.
As with anything in your business it should be approached in a considered and consistent way, backed up by research and data.
“Without data to back your decisions you’re just another person with an opinion”
The experienced team at The People & Culture Office can develop a best practice compensation and benefits strategy to help you achieve business success. Contact us to arrange an obligation free meeting.
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HR is so much more than a set of policies and procedures. Strategic HR Management is about developing value adding strategies surrounding compensation & benefits, workforce planning, recruitment, performance management and career development. The policies and procedures aspect of HR is about compliance and risk management; they work within the wider business environment but their core purpose is to provide a risk management framework to manage the industrial relations and employee relations aspect of the business.
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